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EUR/USD – 4H.
As seen on the 4-hour chart, the EUR/USD pair performed a consolidation above the correction level of 38.2% (1.1066), which allows traders to count on the continuation of the growth of quotations. However, in the upper area of the downward trend range, there is a very high degree of probability that the pair will turn in favor of the US currency and the fall of quotations will be resumed. Thus, the rebound from the upper line of the range or the closing of the pair under the Fibo level of 38.2% (1.1066) will work in favor of resuming the fall in the direction of the correction levels of 50.0% (1.1030) and 61.8% (1.0995). As a result, I expect exactly this scenario.
Just a two-line message from Donald Trump could reignite markets, or at least force traders to actively discuss the prospects for a trade conflict between America and China. Let me remind you that the latest information on this topic was that America refused to cancel all duties on imports from China under the "first phase" agreement, and China refused to prescribe in the agreement a fixed amount for which it undertakes to buy agricultural products from American farmers. On this, I can officially state another impasse in the negotiations. Yesterday, the US President reiterated that if there is no agreement with China, he will "simply impose new duties on Chinese goods."
All of Trump's actions are very similar to the carrot and stick method. But the American president's whip is "tariff", and the carrot is "verbal". In words, Donald Trump regularly stated that "he treats China well," "negotiations are going on productively." However, this is all from the positive to be addressed to Beijing. If we consider the specific actions of both parties, they continue negotiations, "productive", in the opinion of both, but at the same time all duties remain valid, negotiations have once again stalled, the parties cannot reach a consensus decision. Now Trump is threatening to introduce new duties, most likely, not referring to "if the agreement is not signed," but "if China will delay the signing of the agreement with America." China will also not stand aside. Its economy is not much inferior in strength to the American, because it can withstand a trade war. And I believe that if an agreement is not signed before the New Year at least in some phase, then Trump will introduce new duties because it is the American President who needs to hurry with the issue of ending the trade war, not China. Although, again, in words, the US leader stated that it was China that needed an agreement with America and not vice versa. In general, Trump is trying hard to convince the Americans that he is not to blame for the increase in prices for Chinese goods. That he wants to end the trade conflict, but China does not want to meet America. From my point of view, such a policy negatively affects Trump's political ratings, but we will get a continuation of this story since it is the American president who needs to rush in this matter.
Forecast for EUR/USD and trading recommendations:
On November 20, traders will again try to turn the euro/dollar pair down, as the graphic picture suggests this option. Thus, I recommend buying the euro currency only if the bull traders execute a close above the upper line of the trend range. Otherwise, a rebound from the upper line of the range or closure below the Fibo level of 38.2% will work in favor of the US dollar and will allow the pair to sell with a target of Fibo level of 50.0% (1.1030). The information background will remain empty today, although the so-called "minutes of the Fed" will be published in the evening.
The Fibo grid is based on the extremes of October 1, 2019, and October 21, 2019.
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