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The United States began full-fledged military operations against the single European currency, having achieved its substantial retreat. After Donald Trump signed the Pentagon budget for next year, which includes the possibility of imposing sanctions on companies involved in the construction of Nord Stream 2, Washington demanded that all work be stopped immediately, threatening companies with the seizure of their property in the United States and the ban to conduct transactions in dollars. The Swiss company Allseas complied with Washington's demand, and not only suspended pipe laying work, but also took its ships away from the area where construction work is being carried out. In any case, the European business, which is the main beneficiary of Nord Stream 2, is clearly very worried and excited.
A reflection of growing fears was the weakening of the single European currency. In turn, the Russian Foreign Ministry said that the United States is striving to deprive European consumers of an uninterrupted source of cheap fuel, and also intends to force Europe to buy expensive American liquefied natural gas, thereby slowing the development of its economy and its ability to compete with the United States. And strangely enough, but the reaction of the euro is only a confirmation of these words. This is confirmed by the words of the deputy representative of the German government, who said that such extraterritorial sanctions affect the interests of German business and constitute interference in the internal affairs of Europe. At the same time, the Russian side assures that the technical means at its disposal allow it to independently complete the construction of Nord Stream-2.
Meanwhile, in the United States itself, final GDP data for the third quarter was published, finally confirming the fact of a slowdown in economic growth from 2.3% to 2.1%. In other words, the dollar had no objective reasons for strengthening, but the political factor made it possible for it to strengthen its position in relation to the euro.
GDP growth rate (United States):
Today, despite the fact that the week will almost be inactive, the dollar has a chance to further strengthen its position. The reason for this is not only the firm desire of the United States to stop the construction of Nord Stream 2, but also orders for durable goods, which can show an increase of 1.1%. So, unlike Friday, the dollar will be supported not only by political factors, but also by macroeconomic statistics.
Durable Goods Orders (United States):
In terms of technical analysis, we see that the EUR/USD pair could not resist and once again plummeted, reaching 1.1065 as a result, and then forming a retreat to the region of the periodic level of 1.1080. In fact, the slowdown at the end of last week served as a kind of platform for strengthening, which, along with the general information background, gave an inertial movement.
In terms of a general review of the trading chart, we see that the recovery process regarding an elongated correction is trying to set a course similar to the one that was at the beginning of last month.
It is likely to assume that the oscillation along the 1.1080 level will remain for some time, where the boundaries of the oscillation are 1.1065/1.1095. Trading operations can be considered in case of a clear breakout of the given framework.
We concretize all of the above into trading signals:
- We consider long positions in case of price consolidation higher than 1.1095/1.1100.
- We consider short positions in case of price consolidation lower than 1.1065/1.1060.
From the point of view of a comprehensive indicator analysis, we see that due to the recent slump, indicators relative to all the main time intervals have taken a downward position.
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