EURUSD Extends Winning Streak With Dollar Weakened From Multiple Fronts

Summary:
• EURUSD is on the uptrend courtesy of multiple weaknesses in US dollar fundamentals, headlined by trade tariffs.

The euro extended its gains against the US dollar for the third session in a row as soft US economic data and trade tariff war continue to define the markets. The EURUSD trading pair was up by 0.1% and traded at 1.0395 at the time of writing. The DXY index, which weighs the US dollar against six of the world’s top currencies, has been on a successive three-day decline and was at 107.717.

The Odds Are Stuck Against the Dollar

US President Donald Trump said on Tuesday that he was in no hurry to negotiate with China over the trade tariff war between the two nations. China has lined up counter-tariffs targeting over $20 billion worth of US imports, and that figure is likely to rise if the tension escalates.

However, China has delayed implementing its tariffs until February 10 to give room for negotiations. Nonetheless, analysts opine that an extended paralysis in the negotiations could draw in multiple nations, including the Eurozone.

Meanwhile, yields on US treasury bonds fell in line with the sentiment surrounding the US dollar amidst the trade crisis. Returns on benchmark 10-year bonds were at 4.488, having lost 2.7 basis points at the time of writing. That supports continued gains by the EURUSD pair in the near-term.

The December US JOLTS Jobs Openings figures released on Tuesday printed at 7.6 million, weaker than the forecast figure of 8.01 million. That raised concern over the US labour market and brought downward pressure on the dollar. PMI data and Non-Farm Employment Change will be the focus on Wednesday and will add fresh impetus into the EURUSD trading pair.

EURUSD Prediction

EURUSD pivots at 1.0394 and the pair will continue rising if action stays above that level. The next destination will likely be the first resistance at 1.0420. A break above that level will strengthen the momentum and potentially test 1.0440.

Conversely, breaking below 1.0394 will signal a shift in the momentum to the downside. In that case, the first support could be established at 1.0372. Breaking above that level will invalidate the upside narrative and potentially test the second support at 1.0343.