EUR/USD – Fears of a global trade war; political turmoil in Italy – Analysis for March 5th 2018
The EUR/USD pair has slightly gained amid a weakening of the US dollar caused by Donald Trump’s plans to impose tariffs on imported steel and aluminium. Some uncertainty may also be seen in Europe due to the outcome of the election in Italy. Support is set at 1.225, resistance at 1.235.
According to early projections, none of the Italian parties will be able to form a government alone. The outcome of the election sparks uncertainty about the future of the third-largest economy in Europe. Voters have mostly backed up right wing parties. A coalition of centre-righ parties, including Silvio Berlusconi’s Forza Italia has received 37 percent of votes. Highly eurosceptical Five Star Movement has become Italy’s strongest single party with 33 percent of votes.
In the meantime, the greenback remains on the backfoor. Donald Trump informed that the US will impose tariffs on steel and aluminium. This raised fears that it will spark a global trade war. United States are the second biggest importer of steel in the world. Among other things, the metal is used by the car industry, and imposing the tariffs would make the prices move higher. Economists claim it will slow down growth, while fueling inflation at the same time and it will hurt the US economy. The European Union has already informed it will take retaliate actions and impose tariffs on US goods.
10:00 Euro zone – PMI
11:00 Euro zone – Retail sales
16:00 USA – ISM Non-manufacturing/services
Pic.1. EUR/USD chart.
Donald Trump’s plans to impose tariffs on steel and aluminium sparked fears of a global trade war. Today’s morning has brought some bad news for the euro zone as the preliminary outcome of the elections was released. The euro may find some support if the PMI and retail sales numbers won’t disappoint.