The U.S. dollar dropped against a basket of major currencies and the pair has once again climbed above 1.23 level. Imposing tariffs on U.S. imported goods was the main reason of the greenback’s weakening. Support is set at 1.23, resistance at 1.24.
Monday was the last day of the long, holiday weekend and the markets seen much less liquidity than usual. All the events driving the pair took place across the pond. The biggest U.S. indices significantly dropped after China announced imposing tariffs on 128 U.S. imported goods. Pork and aluminium scrap tariff rates were increased to 25%. China also imposed 15% tariffs on a list of other goods, like wine and fruits.
China’s actions are a reply to steel and aluminium imports imposed by the U.S. and bring escalation of tensions between the two economies. China’s ambassador in the U.S. said that Beijing is ready to scale up its actions if Washington would decide to impose further tariffs on Chinese goods.
The U.S. data will come in focus during the course of the week, with the non-farm payrolls release being the most important. The releases are expected to determine the path of the Federal Reserve interest rate hikes. Although the U.S. economy has showed good results lately, recent drops on Wall Street may potentially influence the central bank’s monetary policy.
Pic.1. EUR/USD chart.
TTraders are returning to their desks after the long holiday weekend. There will be no important data releases in the U.S. today, so good readings in Europe may push the pair further up. Market participants should also look for any news about the tensions between China and the U.S.