The pound continues to be under pressure in tandem with the US dollar, pulling down the European currency yesterday. Yesterday's news that British Prime Minister Theresa May postponed the Brexit vote in parliament, which was scheduled for today, led to a massive sale of risky assets. The cancellation of the vote further contributed to the uncertainties in the markets and the further situation with the break in relations between the EU and the UK.
It is unclear when the new parliamentary vote will take place.
During her speech, British Prime Minister Theresa May said that the parliamentary vote scheduled for Tuesday was postponed since Brexit without an agreement would significantly damage the economy. She also stressed that she is making increasingly active preparations for Brexit without an agreement since the inability to reach an agreement in parliament increases the risk of Brexit without an agreement. May also noted that if Parliament does not want an agreement on Brexit, it is necessary to seek a compromise.
Yesterday, another round of talks took place between the United States and China.
As it became known, US representatives in the person of Treasury Secretary Stephen Mnuchin and White House Trade Representative Robert Lighthizer held talks with Chinese Vice Premier Liu He on trade relations. It mainly concerned agricultural purchases by China, as well as changes that would be made to the position of China's economic policy.
The data released on Monday afternoon did not provide strong support for the US dollar. According to the report, the index of employment trends in November of this year decreased due to weak indicators of labor market indicators. Thus, the Conference Board employment trends index in November of this year was at the level of 110.41 points against 110.73 points in October. Part-time employment data for Americans as well as the percentage of companies that failed to fill their vacancies made a negative contribution to the index.
The pressure on the European currency is also exerted by the talk that the ECB may change its mind and announce the extension of the net asset purchase program at the upcoming meeting, which will take place tomorrow, December 12th. Economists predict that the central bank should announce the full completion of the current program, but recent statements by the ECB Governor may indicate changes in plans to complete net asset purchases this month. Any change in this strategy will lead to a sharp drop in the European currency, as it will be a complete surprise for the markets, which will accordingly affect plans to raise interest rates in the eurozone next year.
As for the technical picture of the EUR / USD currency pair, the current decline in the euro from the week highs does not pose a threat to buyers yet. If the bulls manage to keep the support area of 1.1350 today during the day, it will be possible to build the lower border of the ascending channel, which will allow us to count on a breakthrough resistance of 1.1390 with further growth in areas of 1.1415 and 1.1450. In the case of decline, the trade will move to a wide side channel with a bearish advantage, but support can be expected from the range of 1.1320-1.1310.
A good report on producer prices in the US can support the US dollar.
The material has been provided by InstaForex Company - www.instaforex.com