The EURUSD pair continues to tread water around the 1.17 handle, unable to attract buying interest ahead of the key event of this week – the EU-US trade talks which could give a more directional impulse to the single currency. The pair failed to make a clear break above the mentioned resistance on several occasions, which points to a lack of bullish enthusiasm among traders.
A cautious tone is explained by the upcoming Trump-Juncker meeting where the two leaders will discuss trade relations between the EU and the US. The talks are a wildcard for the euro as trade rhetoric could either send the pair lower amid a risk aversion, or inspire euro bulls should the European Commission President cheer Trump’s call to drop all trade barriers and tariffs with each other so that to encourage free trade.
Depending on the outcome, EURUSD could jump to 1.1750 and higher, or drop to the 1.1620-1.16 area. Anyway, the bullish scenario looks less likely, considering that the EU is reported to be preparing counter tariffs of $20B on US goods. Ad for tomorrow’s ECB meeting, it could be a non-event for the pair this time.
By Helen Rush
Senior Analyst at Capital Markets