16.09.201910:23 Forex Analysis & Reviews: EURUSD and GBPUSD: Euro buyers expect a rate cut from the Fed this week. According to rumors, the UK government has another trump card on the topic of Brexit

US President Donald Trump was hardly pleased with the report that eurozone exports to the US grew quite high, while US imports were almost twice as low. According to Trump, the European Central Bank deliberately undervalues the euro, which harms American exports.

According to the Bureau of Statistics, eurozone exports to the US rose to 32.8 billion euros in July 2019, while imports from the US to the eurozone increased to only 18 billion euros. The positive trade balance of the eurozone with the United States amounted to 14.7 billion euros against 11 billion euros in June. As for the calculation for the first seven months of 2019, the positive balance of trade between the eurozone and the US was at the level of 79.8 billion euros against 72.3 billion euros for the same period of 2018.

Let me remind you that last Thursday, the European Central Bank lowered the deposit rate, leaving the key interest rate unchanged, but announced the resumption of the bond purchase program.

If the Fed does not take a response this week, and it comes to lowering the interest rate in the United States, the US leader will likely return to duties against the EU. In November, it is expected that a decision will be made to increase duties on car imports, including from the EU, and we remember that this industry is already showing a decline, and even bigger problems can weaken the entire eurozone economy.

Given the current state of the EU's economy, gradually slipping into recession, and the split within the ECB – the introduction of duties by the United States can be a strong blow.

Friday's data helped the US dollar to regain several positions, stopping the upward trend, which was outlined in the EURUSD pair.

According to a report by the US Department of Commerce, retail sales in August this year increased by 0.4% compared to a month earlier, while economists had forecast sales growth of 0.2%. In July, retail sales rose by 0.8%.

The retail sales report is good news for the Fed, as it is one of the main engines of the US economy, accounting for two-thirds of GDP.

Preliminary data on consumer sentiment also pleased traders. According to a report by the University of Michigan, in early September this year, the index rose to 92.0 points against 89.8 points in late August. Economists had expected the index to rise to 91 points. It is expected that the Fed will continue to lower interest rates, which suits consumers, as this decision makes more accessible credit facilities.

The US Department of Commerce on Friday also announced that inventories in July 2019 increased by 0.4%, while economists predicted an increase of 0.3%.

The only news that did not "appeal" to the Fed was the report on lower prices for foreign goods imported into the United States. According to the US Department of Labor, prices fell by 0.5% compared with July, while economists had expected prices to fall by 0.4%. Export prices in August also fell by 0.6%.

It is worth noting that the introduction of duties by the United States, which I mentioned above, can help increase inflation and import prices, as it will force American importers to buy goods from more expensive suppliers.

As for the technical picture of the EURUSD pair, it remained unchanged. Buyers of risky assets still need a breakdown of the resistance of 1.1080, however, the upward trend will be limited by last week's high in the area of 1.1110. Most likely, the probability of a decline in US interest rates will put pressure on the dollar at the beginning of the week, so it is best to open long positions after a correction from the levels of 1.1050 and 1.1020.

GBPUSD

The pound rose on Friday on rumors that the British government has a plan for an agreement on the withdrawal of the UK from the European Union, which increased expectations for a positive outcome and the possible conclusion of a deal on Brexit in October. However, rumors have remained rumors, and only today's meeting between British Prime Minister Boris Johnson and European Commission President Jean-Claude Juncker will clarify the situation. If there are no specifics from the meeting again, the pound will likely return to a more acceptable trading range of 1.2285-1.2400.