Trade tensions between the US and other nations continued to hurt market sentiment as the US insisted on additional trade tariffs on imported goods from China, Canada, the European Union, and presently pushing allies to stop the importation of Iranian crude oil by November 4, leading to increased market uncertainty across both emerging and developed markets.
Trade tensions coupled with economic fundamentals have become key factors in projecting possible market direction in recent months, therefore, both will be used to broaden forex outlook ahead of unemployment data this week.
EURUSD
The US dollar gained on strong economic fundamentals and progressive rate hikes by the Federal Reserve, however, lower than expected economic growth rate and slowing consumer spending despite tax cuts weighed on US dollar outlook against the Euro currency last week.
On Friday, the Euro jumped 0.83 percent against the US dollar following an agreement reached by the European Union leaders on immigration control and better than expected Consumer Price Index ‘estimate’ released for the month of June. The agreement is now expected to put an end to the uncertainty surrounding Angela Merkel’s coalition party and boost business sentiment in the Euro area.
The EURUSD closed as a bullish pinbar as shown above but below 1.1740 resistance levels. While the data pointed to a better business sentiment in the region, the growing trade war with the US and the possibility of the European Union buying long-dated bonds from next year to maintain record low interest rates will impact the Euro outlook against the greenback and expected to contain rebound below the 1.1852 key resistance that doubled as double top.
Therefore, a break above 1.1740 resistance level should attract enough sellers to reinforce the bearish move started in February towards the ascending channel, a sustained break of that level should open up 1.1398 support.
