Germany’s interior minister said that good progress has been made towards an agreement with Italy, regarding the migration issue. It happened after Italy threatened to veto the EU budget. Earlier this month, there were agreements with Spain and Greece, and we can expect to see maybe similar agreement with Italy too! Also, there is possible progress to ease tensions within the EU, especially with Italy.
EUR/USD rose breaking the 1.1675 resistance line and continued to struggle with the level (Asian session). As the upward trend-line remains intact we maintain our bullish bias, however bearish tendencies and some corrections may occur as the US dollar strengthens due to the developments on the NAFTA issue.
We could see it breaking the 1.1675 resistance line and aim for the 1.1740 resistance level. On the other side, if the pair come under selling interest we could see it reaching out or even break the 1.1623 support line.
Two sides are increasing their pressure on Canada to join the agreement after they have reached deal. Autos trade, dispute settlement and agriculture are key issues.
“The deal would have to be tweaked should Canada not join” – stated by Mexico’s economy minister. On the other side, Canada’s Foreign minister will be travelling to Washington today in order to continue negotiations. Minister also stated that Canada will only sign the agreement if it is good for Canada.
USD/CAD dropped heavily breaking consecutively the 1.300 and the 1.2965 support levels, with the 1.3000 turning to resistance, as the pair broke once again the 1.2965 level (during Asian session). We could see the pair rise albeit at a slower pace, should the USD strengthen. We could see the pair aiming if not breaching the 1.3000 resistance line and should it be breached, the way may be open for the 1.3047 resistance barrier. On the other side, we could see it breaking the 1.2965 support line once again, aiming for the 1.2925 support hurdle.
On Monday, Britain and the European Union reached an agreement for a transition period after Brexit. The pound strengthened on confirmation that Britain will continue to be part of the European Union for 21 months until end of 2020. Under the transition deal, the U.K. will continue implementing EU rules until the end of 2020. However the problem with the Irish border remains unsolved. The Republic of Ireland, an EU member state and the UK including Northern Ireland, do not seem to agree. This may create further inside pressures in N. Ireland as the outcome seems to be unsettled. Any further positive headlines could support the GBP and vice versa.
Cable jumped yesterday on the news, breaking the 1.4040 resistance level, however it later subdued somewhat and traded slightly below it. We see the case for the pair to trade in a sideways manner for the next couple of days with a bearish mood as the financial data due out today, could weaken the sterling. On the other hand, the FOMC interest rate decision due out on Wednesday, could support the USD. Should the bears take the reins, we could see the pair breaking the 1.3915 support level. If the bulls have the upper hand we could see the pair breaking the 1.4040 resistance line again and aim for the 1.4168 resistance hurdle.