The euro fell in the morning on Tuesday amid weak fundamental statistics and, after a slight upward correction, continued to fall against the backdrop of a speech by the European Central Bank President Mario Draghi.
Eurozone
According to the statistics agency report, the eurozone's foreign trade surplus in November of this year was only 19.0 billion euros against 23.4 billion euros in November 2017. Eurozone exports fell 1% in November, while imports fell 1.9%. As for the monthly period, the eurozone's foreign trade surplus in November was at 15.1 billion euros against 13.5 billion euros in October.
The pause taken by the White House in relation to the EU and the trade war seems to benefit the European economy, but immediately after the settlement of the trade conflict with China, I think the administration will return to the issue with the eurozone. Let me remind you that in the middle of last fall, US President Donald Trump expressed his dissatisfaction about the slow process of drawing up a trade agreement with the EU, but nothing moved.
The euro rose slightly after the release of weak fundamental statistics on producer prices in the US, but this was clearly not enough to break the downward trend.
According to the data, the producer price indicator in the US declined in December 2018, indicating weak inflation in the manufacturing sector.
As stated in the report of the US Department of Labor, PPI producer price index in December fell by 0.2% compared with the previous month. The base index of final demand, which does not take into account the volatile categories, decreased by 0.2% compared with November. Economists had forecast a decline in the index by 0.1% and a growth in the base index by 0.2% in December.
The speech of the ECB President Mario Draghi again discouraged the bulls to open long positions on the euro, which led to a drop in the trading instrument.
Draghi said that recent economic data was weaker than expected, and uncertainty, mainly due to global factors, is still significant. This suggests that, apparently, the promised increase in interest rates from the European Central Bank this summer will remain just a promise. Mario Draghi also noted that at present it is necessary to maintain a significant degree of monetary stimulus, clearly hinting at low-interest rates.
As for the technical picture of the EUR / USD pair, there is currently a slowdown in the downward movement, which may lead to the formation of an upward correction in the euro. If the level of 1.1375 is able to keep the pressure of sellers, you can count on a larger increase in risky assets with a return to the resistance of 1.1440, which opens up the prospect of further growth in the maximum area of 1.1480. If the bears can push the support of 1.1375, then it is best to consider new long positions in the trading instrument after updating the minimum of 1.1340 and 1.1310.
UK and Brexit
Yesterday's main topic was a vote in the British Parliament on the Brexit deal, which, as expected, turned out to be a failure. British Prime Minister Theresa May suffered a defeat by a vote on the Brexit agreement in parliament, with 432 votes against and 202 votes in favor. It is noteworthy that the 118 members of the Conservative Party opposed the agreement.
Such a situation raises the political future of the head of the Conservative Party of Great Britain.
Immediately after that, Theresa May said that the vote did not tell us anything about what the parliament supports, and the citizens of Great Britain and the EU deserve clarity.
May also noted that if the House of Commons expresses confidence towards the government, it will continue to work on the Brexit plan, seeking new conditions from the EU, since only an orderly exit is the ultimate goal, and the time delay is an initially losing strategy.
Immediately after the vote, Labor Party leader Jeremy Corbyn spoke in favor of a vote of no confidence in the government.
We only need to continue to closely monitor the further development of the political situation in the UK.
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