The Euro is watching events in Italy
The dollar was relatively stable on Wednesday and not yesterday, shows a zeal for the heights. It seems, at this stage, the fuse of the bulls is running out, and rally you want fresh makeup. Where the dollar can get in the coming days? The escalation of trade wars and statistics on the US labor market, where traditionally the focus will be on the indicators of wages.
The GBP / USD on the eve visited the low of the 23rd of August in the area 1.1530 and even in the moment of violating the integrity of the 20-day moving average. Now the Euro is licking his wounds, trying to grab the 1.16 level, a daily close above which will provide the easing of the downward pressure in the short term.
The single currency continues to cautiously monitor developments in Italy. Today, Deputy Prime Minister Salvini said that the new budget won’t break the rules and limits of the European Union, left about 2% of GDP next year. However, investors do not hurry to fall into euphoria from the positive reviews and prefer to wait for the details. While they are not concerned about increasing costs and as a consequence worsening the situation of already bloated debt remains and continues to put pressure on the Euro.
So, in the short term, the risk for EURUSD remains in force, considering the growth potential of the dollar to the escalation of the trade conflict between the US and China. However, in the longer term the current decline can be used as a buying opportunity, as the Euro could benefit from the collapse of its asset purchase programme, the ECB and rate hikes in Europe, which may begin in a year, while the prospects of further fed tightening further can be called into question.
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