USD Got Stronger, but Ready to Give Ground

Last Friday, December 13th, the US President Donald Trump announced his decision to scrap new tariff fees on Chinese goods after December 15th. The parties are reported to come very close to reaching an agreement on phase one deal and may sign it in the nearest future.

At the same time, existing tariffs will remain at 25% with 7.5% put on much of the remainder.

As usual, Trump jumped ahead a bit and said that the parties would begin negotiations on the phase two deal immediately, rather than waiting until after the 2020 Elections.

EURUSD plummeted in response to this news because market players finally have facts in their hands relating to the trade agreement. Not all details are known, for example, nuances of the agricultural sector issue are still rather unclear, but basically the situation is quite good. The parties have already been negotiating for 16 months and seem to have reached a significant point in their talks.

EURUSD on charts

As we can see in the H4 chart, EURUSD has reached the short-term downside target at 1.1184; right now, it is correcting towards 1.1100. After finishing the correction, the pair may start the fifth rising wave with the target at 1.1236 and then start a new correctional downtrend to reach 1.1111. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is no longer moving inside the histogram area. The indicator is expected to fall towards 0 to complete the correction on the price chart.

In the H1 chart, EUR/USD is moving downwards. Possibly, today the pair may test 1.1148 from below and then fall towards 1.1100 to complete the correction. Later, the market may break this correctional channel and start a new ascending wave. From the technical point of view, this scenario is confirmed by Stochastic Oscillator: its signal line is moving above 80, which means that the indicator may reverse downwards and fall to reach 50. In this case, the correction on the price chart may be over soon.