The euro-dollar pair is stuck on the middle line of the Bollinger Bands indicator, which coincides with the Kijun-sen line on the D1 timeframe. This resistance level corresponds to the level of 1.1080 - this target was "too strong" for the bulls of the pair. They tested it over the previous three days, but still had to retreat. Although overcoming this level would allow customers not only to enter the 11th figure, but also to identify for themselves the next goal in the form of resistance level 1.1170 (the upper line of the Bollinger Bands on the daily chart). However, an appropriate occasion is necessary for such a breakthrough. Whereas the fundamental background for the EUR/USD is controversial.
In general, the current week is not packed with planned events. An unplanned "opportunity" is Trump's unexpected meeting with Powell, which left more questions than answers. According to the American president, they discussed the prospects of monetary policy, including negative rates. At the same time, the Federal Reserve denied the words of the head of the White House, although he confirmed the fact of the meeting. According to the Fed, the course of monetary policy will completely depend on economic prospects, and the regulator will make all its decisions based on an analysis of the current situation. That is, without any policy.
It is obvious that the official position of the fed a priori can not be different, since formally, this body is independent of the White House. Therefore, the experts could only guess what was the true need for an unexpected meeting at a high level.
Many connected this situation with China, or rather, with the prospects of the negotiation process between the United States and China. Despite all the exhortations of the White House, the problems in the negotiations are already obvious. China is ready to resume the purchase of American agricultural products, but does not want to commit itself to the acquisition of large volumes and specific terms. States, in turn, doubt the cancellation of duties already imposed and remain silent about the possibility of deferring or canceling the next (rather painful) tariff increase scheduled for December 15.
As a result, the negotiations actually stopped, although it is only a "phase number 1" of a large trade deal. The second stage will raise more complex and strategically important issues - both for China and for the United States. Given the fact that the parties have not been able to agree on an interim agreement for many months, it is too early to talk about broader agreements.
Yesterday, Trump threatened Beijing again: according to him, Washington "will simply raise duties if China does not make a deal." Such a "coercion to cooperate" is unlikely to work - at least almost all experts on both sides of the ocean are sure of this. Also yesterday, the situation was aggravated by the Hong Kong issue. The US Senate unanimously passed the bill on the protection of human rights in Hong Kong, after which representatives of the PRC expressed their strong protest. According to the official of Beijing, the Americans are interfering in the internal affairs of Hong Kong and China. "... if Washington continues to act in this way, the PRC will take decisive retaliatory measures to counter this." By the way, many of the Chinese politicians are convinced that the States behind the scenes support or even fund Hong Kong protesters.
Thus, the US dollar is under pressure from an external fundamental background amid a half-empty economic calendar. This allows the bulls of the EUR/USD pair to stay within the 10th figure and even show a sluggish growth. On the other hand, the European currency also feels very insecure against the background of the "dovish" comments of the ECB representatives and in anticipation to the speech by Christine Lagarde on Friday. In general, the mood remains bearish: Luis de Guindos said that the regulator has not yet used "all available instruments" (criticizing the inflationary dynamics), the head of the Bank of Spain, Pablo Hernandez de Cos, assured the market that rates will be low "on over a longer period, "and Slovenian Central Bank Head Bostjan Vasle recalled that the ECB retained the potential to further reduce rates.
As a result, the EUR/USD pair is reasonably traded in the flat, being stuck within the 10th figure. Most likely, the pair will be trading in a fairly narrow price range today, before the publication of the Fed's minutes. This document will help to understand what sentiments prevail in the Committee. Most likely, the majority of the members of the Federal Reserve advocated maintaining a wait-and-see position, and this fact may provide background support to the greenback. However, if the focus is shifted to risks and uncertainties regarding future prospects for trade, the dollar may fall under a wave of sales, given the latest developments. In this case, the probability of a rate cut in the first half of next year will increase, exerting corresponding pressure on the US currency.
