The European Union has threatened to impose new tariffs worth $300 billion if the U.S. moves forward with tariffs on European cars.
President Donald Trump, who has criticised the EU of its trade surplus with the U.S. before, and for its higher import duties on cars, said last week that the government was completing its study and suggested the U.S. would take action soon.
The latest update in the global trade war comes on Friday when the U.S. moved to impose $34 billion of tariffs on Chinese exports. China is expected to respond with tariffs of its own on U.S. goods.
The Euro had been boosted on Friday after the European Union’s leaders reached a deal on migration, easing pressure on Merkel. However, the Euro came under pressure after Germany’s interior minister asked to resign over immigration policy, throwing into doubt the future of Angela Merkel’s coalition government.
In the UK, British factories kept up a steady growth in June but worries about global trade and Brexit still hit confidence about the outlook to a seven-month low.
But the better than expected Manufacturing PMI (54.4 versus forecast at 54.1) will provide additional optimism for the hawkish members on the committee to raise the rates.
All eyes will be on US manufacturing PMI which is expected to reach 58.2.
As we expected on the daily chart, the price had reached the key resistance at 95.5 and bounced back from it, powered by divergence on RSI.
The price also had shaped a reversal double top pattern.
So, the index is supposed to get back down to the support zone again of 93.2-92.6, then start its journey to the C wave.
On the daily chart, the pair retested the key resistance of 111.1 and the descending trend from the high of 2017.
So, any bounce here will lead the price to the first support of 108.15.
On the daily chart, the price has reached the support zone of 0.7325-0.7365.
The pair is supposed to find some breath powered by divergence on RSI to reach the key resistance of 0.7515, where the descending trend from the high of February is located.
As we expected before, the price has reached the support zone 81.2-80.5 as the price is moving sideways.
So, the price is expected to retest the head of the pattern to again reach the levels of 84-84.4.
On the daily chart, as we expected, the price has risen from the support of 81.15, near the green support zone.
The pair bounces with two engulfing bars from the 78.6% Fibonacci level.
A Gartley harmonic pattern has been shaped at these same levels, with an oversold area on RSI.
All these factors enhance the continuation of bullish movement to reach first the resistance at 85.5, then the retest at 86.95.