EUR/USD Has Three Reasons To Rise

  • EUR/USD is stable after the downturn on Tuesday.
  • Italy, Brexit, and the echoes from the stock market crash are eyed, and things are improving.
  • The technical picture looks a bit bearish, but if resistance is broken, there is room to rise.

EUR/USD is trading in the lower half of the 1.1300 handle, stable after the storm. US stock markets crashed on concerns that the US and China did not reach a meaningful agreement came after President Donald Trump tweeted that he is a “tariff man” alongside hopes for a deal. Moreover, the Administration nominated Robert Lighthizer, a China hawk, to lead negotiations with the world’s second-largest economy.

New York Fed President John Williams did not help either. He was upbeat on the economy and did not share the concerns some of his colleagues had about the global and US economies.

The US Dollar strengthened on both his comments and the China talks. The risk-off atmosphere sent the pair down towards 1.131.

Since then, there have been several positive developments that support further gains.

1) China’s upbeat statement

After most of the comments about the Trump-Xi Summit came from Washington, Beijing chimed in. They said the encounter was successful, confirmed there would be 90 days for talks, and aligned some other declarations with those coming from the White House.

European stocks are already faring better than US ones, and S&P futures are positive. While US markets are closed today due to the funeral of former President George H. W. Bush, the rise of futures supports the pair.

In addition, there are reports that China is indeed taking steps to buy soya beans and other agricultural goods from the US, a trust-building move.

2) Italy climbdown continues

The euro zone’s third-largest economy had already begun retreating from their tough stance last week and are ready to consider a lower budget deficit.

Brussels and Rome are now getting even closer as reports suggest that the Italian government may be ready to drop its plan for a Citizens’ Income that is a key electoral pledge fo the 5-Star Movement. Such a move could accelerate negotiations for a deal between Italy and the European Commission.

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