The U.S. dollar found itself on the backfoot again after a batch of economic data was released in Europe and the U.S. In effect, the pair has climbed above the 1.24 level. Fears of a possible global trade war were reignited after one of the top economic advisors, Gary Cohn, resigned. Support is set at 1.235, resistance at 1.245.
Yesterday brought a batch of new economic data. First, we’ve seen the retail PMI in the euro zone. Gains were seen in particular countries, and the PMI for the whole bloc came at 52.3, 1.5 pts higher than the last reading. Numbers from the U.S. further disappointed the dollar bulls. Factory orders dropped last month by 1.4%, while the previous reading showed a growth by 1.8%. Durable goods orders fell for the second consecutive month, with the reading coming at -3.6%.
Unfortunately, this wasn’t the end of bad news for the dollar. Gary Cohn, one of the top economic advisors of Donald Trump, resigned after the president said he was sticking with his plan to impose 25% tariff on steel import and 10% on aluminium import. Cohn was widely seen as a voice of reason in the White House, holding back the protectionist forces in the U.S. administration. European Union and China have already declared that imposing the tariffs will cause retaliatory actions – imposing tariffs on US goods. This may end up in a global trade war and slow down economic growth.
Pic.1. EUR/USD chart.
The greenback found itself on the backfoot again as concerns about the plan to impose tariffs on steel and aluminium in the U.S. were reignited. The U.S. data will probably be the main factor driving the pair today. Any disappointment with the ADP employment numbers may further weaken the U.S. dollar and push the pair higher.