The euro managed to gain momentum over the US dollar. The price of the single currency bounced off the 1.1100 support area with a daily close. The price is expected to rise amid the US trade war tensions. The US economy struggles with the weak economic reports published recently.
After the European Election voting, traders are awaiting the results which may influence the euro gains. Presently, analysts say that two factors are likely to have an impact on the current economic situation: 1) if the collective eurosceptic share of the vote significantly exceeds 25%, 2) whether these parties can work together as a united group over coming months. EU leaders are to hold talks in Brussels on Tuesday to start the process of appointing the next leaders of the EU institutions, including parliamentary, commission and council presidents.
Recently, the ECB Policymaker Weidmann stated that decreasing spare capacity in the economy, namely the extent to which labor, capital, and other resources are used below their maximum level, would eventually push up prices. This week the euro remains low because there are no signals for its growth.
The US dollar is pressurized by the trade tension which is hammering the economic growth of the US. China is expected to increase tariffs on $60 billion the US imported goods in response to the US decision to hike tariffs on Chinese imports. The escalation of the trade conflict between the US and China threatens to damage the global economy. Moreover, Donald Trump will continue to hold talks with Japan's Prime Minister Shinzo Abe early this week amid tensions over differences on trade. Trump is unhappy with Japan's large trade surplus and is considering slapping tariffs on its auto exports if a bilateral trade agreement is not reached.
The US Prelim GDP report is going to be published on Thursday. The reading is expected to decrease to 3.1% from 3.2%. The US dollar is likely to drop amid weak economic data release. Today, no economic events or reports are going to be published due to the Memorial Day celebration.
The EUR/USD pair is expected to remain corrective and low as not many economic events or reports on either currency are going to be published.
Now let us look at the technical view. The price is currently residing above 1.1200 area after the recent impulsive bullish pressure off the 1.1100 bounce with a daily close. The price is expected to push higher towards 1.1300 area while being held by the dynamic level of support. A rejection off the 1.1300 will lead to the continuation of the preceding bearish trend whereas a daily close above 1.1300 will lead to strong bullish counter in the future.
