EUR/USD: Shaking Away The Profits

• EUR/USD has been retreating from the highs as markets rethink the US-Sino deal.
• Economic data and political uncertainties are set to dominate trading.
• Monday's four-hour chart remains bullish for EUR/USD.

It is just another trade truce – that is the conclusion that many have reached after digesting the US-Sino accord. The world's largest economies shook hands on a deal that includes extended Chinese buying of US agrifoods and a commitment to write down the agreement in the next few weeks. Most importantly, the US has agreed to abandon its intention to slap new tariffs as early as Tuesday.

However, the agreement – celebrated at the Oval Office late on Friday – fails to tackle the structural issues that Washington demanded from Beijing. Moreover, the US tariffs planned for December 15 are still on the table.
Refraining from immediate tariffs sent stocks higher and weighed on the safe-haven dollar, but this trend is now reversing. EUR/USD is off the highs of 1.1060. It hit late last week and nearing 1.10.

A similar mood applies to Brexit talks, which have gone from reports of high optimism to doubts that a deal can be clinched by Thursday's EU Summit. Intense weekend talks have not yielded a breakthrough. The fall of the pound somewhat impacts the euro. The euro-zone is also set to suffer in a no-deal Brexit scenario. 

Weak Chinese trade figures also contribute to EUR/USD's hangover. Both exports and imports fell more than expected and cast more worries about the prospects of the German economy – which heavily depends on trade with China.

Despite weak economic data, some members of the European Central Bank continue opposing the bank's loose monetary policy. Robert Holzmann, the new Austrian National Bank Governor, has said that the ECB's policies are "wrong" and expressed hope for a new course under the new leadership. Christine Lagarde replaces Maio Draghi at the helm of the Frankfurt-based institution in two weeks. 

Brexit headlines and also euro-zone industrial output figures are set to be of interest today as US markets are off due to Colombus Day. 

EUR/USD Technical Analysis

EUR/USD continues enjoying upside momentum on the four-hour chart and trades above the 50, 100, and 200 Simple Moving Averages – all bullish signs.

1.10 remains a critical level due to three reasons. First, it is psychologically essential as a round number. Second, the 200 SMA meets the price at that level. Third, it has separated ranges in October – the currency pair was capped four times below the line and has held above it after breaking higher last week. 

Below 1.10, the next support line is 1.0965, which worked in both directions in mid-September and early October. Last week's low of .10940 follows it. Next, 1.0905 and the 2019-low of 1.0879 await EUR/USD.

Resistance awaits at 1.1060, which was the high point on Friday. The late-September high of 1.1075 follows it. Next, we find 1.1115, which held it down in early September.

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