The downward move in the single European currency continues negatively affected by several factors: uncertainty after the German elections, where governance seems a little more complicated than before and a recovery of the USD, that started after the meeting of the Federal Reserve last week, and also supported by the expected fiscal reform expected to be announced today, although last night Donald Trump has unveiled part of his plan: lowering the maximum tax rate to 35% and reducing the business tax to 20 %.
Since the election of the new President this reform has been one of the greatest uncertainties of his mandate, so if it is finally approved we should see again a return to the "Trumptrade."
Yesterday we got Janet Yellen's remarks, in line with last week's comments during the press conference, saying that the "Fed should be wary of moving too gradually"or it'd be "imprudent to keep policy on hold until inflation at 2%". Quite hawkish comments that did not have a big impact on the market.
All this together set new lows in the EURUSD in the last month breaking important key levels that would point to a further correction with possible target area of 1.16.
In terms of data the references of the day will be durable goods, as well as statements by Bullard (19:30), Brainard (20: 00h) and Trump with the presentation of the tax package (21: 00h) in the US and a statement of Poloz from the Central Bank of Canada at 17:45
We also have a rate decision in New Zealand where we expect the RBNZ to remain cautious, waiting for government formation after the weekend's election, arguing the need for a more depreciated currency despite the fall suffered since its last meeting of more than 2.5%.
EURUSD Daily 5 months trend broken
EURUSD H&S formation. 1.1850 neckline broken, objective 1.16ish
Short EURUSD 1.20 - TP 1.1650 - SL 1.21
Note: This analysis is a personal opinion based on my experience, not a professional signal service. For trading, you must base your decisions on your own criteria
