08.03.201801:38 Forex Analysis & Reviews: EU response to US duties will not be long in coming

In the first half of the day, buyers of risky assets made a series of attempts to strengthen the European currency against the background of good data on the GDP of the eurozone but this was not enough. All attention was focused on the speech of the European Commissioner for Trade, which directly concerned the introduction of US duties on the EU.

The data on the current account deficit in France's balance of payments, which rose in January this year, did not put pressure on the European currency. As noted in the report, the growth of the deficit is directly related to the trade in goods.

According to the Bank of France, the current account deficit of the balance of payments was at the level of 1.6 billion euros against 0.8 billion euros in December. The deficit in trade of goods rose to 4 billion euros from 1.8 billion euros in December.

Data on the economy of the euro area, which recently showed quite a good performance, supported the euro in the morning. According to the report, the eurozone's GDP in the fourth quarter of 2017, compared with the third quarter, increased by 0.6%, and compared with the fourth quarter of 2016, increased by 2.7%. The data completely coincided with the initial assessment. Year on year growth in the fourth quarter of last year slowed to 2.4% from 2.8% in the third quarter.

According to the report, exports of goods and services provided good support to the economic performance. However, spending by consumers and the public sector slowed.

The focus in the first half of the day was on the speech of European Commissioner for Trade Cecilia Malmstrom, who spoke in Brussels today. From her words, it is clear that the EU's executive body has revised the plan against possible duties on the part of the US and the EU which has serious doubts about the validity of the measures.

Malmstrom hopes that the escalation of the trade conflict with the US will be escaped. She called on US President Donald Trump to change his mind about duties on steel and aluminum. She also expressed the hope that the EU would not fall under US duties and in case of a different development of the situation, the bloc will take a number of actions against US duties that will comply with WTO rules.

She also noted that, if necessary, the EU and its trading partners will coordinate their positions in response to a possible US move.

All this suggests that the European Union seriously fears the introduction of duties, which could undermine the economic growth of the region by the middle of this year and also affect the rate of inflation that the European Central Bank is concerned about. Without attention, it will not remain. And the European currency may fall sharply after the growth that has been observed since the beginning of March this year.

As for the technical picture of the EURUSD pair, it remained unchanged compared with the morning forecast. The inability of buyers to break above the level of 1.2450 led to the expected downward correction, which ultimately could cause a more serious sale of risky assets with their return to the larger support area of 1.2350, on which a further upward trend will depend on.