After the Trade War, What Happens Next With the Euro Against the Dollar

After the Trade War, What Happens Next With the Euro Against the Dollar

Back at 1.2537 in January 2018, the EUR / USD pair was at the bearish turn, which set a multi-year low of 1.0878 just two months before. The level can hardly be considered as a temporary bottom when you just think about the next price recovery, but this time attention is not on the technical prospects, but in political analysis.

The impetus for the two-year fall was the US international strategy after Donald Trump became president. Over the past two years, the largest drop in EUR / USD monthly was in March 2018, when the trade dispute began. In those days, Trump declared collecting levies on steel and aluminum for imports from all countries and hit China with the first round of tariffs. Trade discussions began instantly and continued over the previous two years because it was just in December of this year that they announced that the first phase of the economic deal had been reached.

It is important to note that Trump’s trade dispute was not only with China, even though their connection occupied most of the current news topics.

Trump has spread his war around the world, and since the struggle is far from over, there have recently been some positive signs that it may come to an end.

By December of this year, it was announced that the US Congress had approved the USMCA Economic Alliance.

A trade dispute is seen as one of the most important factors causing the global financial crisis. Moreover, once again, while it is not yet completed, finally, in all respects, there is a promising completion of the current course of action.

Financial Development Remains a Major Challenge
The Eurozone ends the year with monetary markers demonstrating that the financial slowdown is continuing. In the US, the situation looks a little better, but concerns about the recession remain. Periodically balanced GDP grew by 0.3% in the EU-28 in the third quarter of 2019, confirming an annual development rate of 1.2%. For the same period, the US annual gross domestic product was 2.1%.

At the same time, the Markit Flash composite output index in the United States reached 52.2 in December, reaching a 5-month high, compared to 52.0 in November, showing the fastest yield since July. In any case, the pace of development was lower than the prospects of the figures and was generally moderate. The composite index PMI in the eurozone Markit Flash for the same period was 50.6 unchanged from the previous month. In any case, the official report expresses the following: the eurozone economy did not receive support in December, as evidenced by the PMI flash index, adjusting the last quarterly period when profitability grew at the weakest rate as the economy emerged from the recession in the economy as the second half of 2013.

US employment at that time remained stable, however, according to Markit, business development in the EU slowed to a five-year low. Inflationary pressure, however, is mysteriously absent. The annual basic consumer price index in the EU remains at 1.3%, as evidenced by the latest information, while in the United States, according to the preferred Fed inflation data, the central PCE price index remains at 1.6%, both figures since November 2018.

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Author : Azeez Mustapha


Azeez Mustapha is an experienced author, trader, markets analyst, signals strategist, and funds-manager.