By Alpari.com
On Tuesday the 8th of October, trading on the euro closed down. The pair fell to 1.0941 from a high of 1.0996 (-55 pips). The bulls were propped up by the rise on the EURGBP cross in the first half of the day. Traders abandoned the pound in favour of the euro on the back of Brexit news. Once the effects of that news subsided, the euro tanked against the US dollar amid increased tensions between the US and China.
On Monday, the US Department of Commerce blacklisted 28 Chinese companies, which will prevent US companies from working with them without a special licence. The Trump Administration is considering the possibility of limiting the flow of capital into China. Investors reacted badly to this ahead of an important meeting between leaders of the two countries embroiled in the trade conflict.
Day’s news (GMT+3):
Expectations of a drop on the euro were met in full. The rate dropped below the lower line of the channel. The bears first broke through 1.0968 before gaining a foothold below 1.0959. The euro is currently trading at 1.0959. In the Asian session, the pair returned to the channel. The boundaries have widened, so there’s a chance that the bulls could try to return to 1.0992 (45th degree).
Trade negotiations between the US and China continue to take centre stage. Markets are already braced for their collapse and for Trump to give the order to raise tariffs on Chinese goods to 25% next week.
If there are no developments on this today, keep an eye on Powell’s speech and the FOMC minutes, taking place at 18:00 and 21:00 (GMT+3) respectively.
By Alpari.com