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Sell EUR/USD

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  • Trading Tips
  • 1 week ago
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It is not expected that the European Central Bank (ECB) to surprise markets with any indication of a
hawkish disposition in the near term given looming political troubles between Italy and the European
Commission over fiscal discipline and the stream of softer economic data points.

Why You Should go short
• Italy’s populist government has been testing the European Commission with its expansionary
budget plans that out rightly contravenes EU fiscal responsibility rules. Nevertheless, the country
still managed to avoid an S&P Global credit rating downgrade on its sovereign debt.
• Meanwhile, markets may become more turbulent ahead following German Chancellor Angela
Merkel’s decision to step away from politics after her term ends in 2021. Her decision comes as
the Christian Democratic Union party suffered major losses in recent regional elections, likely
costing her the political capital necessary for run a successful re-election campaign.
• The US Dollar strengthened following the latest rate hike in September. The market expects the
Federal Open Market Committee (FOMC) to increase interest rates a fourth time this year at its
December meeting in view of still robust economic data. notwithstanding the market slide in
October.
• At the same time, geopolitical risks have also trigged stronger flows into safe haven currencies like
the US Dollar.
• Technicals point to support for the EUR/USD currency pair at around 1.1300 and potential profit point.

Source : Smart Trend

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