The results of last week made it possible for the euro-dollar pair to gain a foothold in the 10th figure. US-China negotiations, on the whole, ended on a major note (contrary to many expectations of the opposite nature), and the likelihood of the implementation of a "hard" Brexit significantly decreased, in anticipation of a key EU summit. However, as it usually happens, the wave of optimism is followed by a wave of consolidation, therefore, the Asian trading session on Monday ended not in favor of the euro. The couple lay in a drift, waiting for the next news drivers.
It is worth noting that both the Brexit issue and the issue of prospects for US-China relations have their own "pitfalls" that spoil the overall positive picture. For example, on the one hand, Washington decided not to raise duties on Chinese goods by $250 billion, which this Tuesday was supposed to grow from 25% to 30%. But on the other hand, the issue of raising 15 percent "December duties" worth $156 billion remained hanging in the air - according to US Trade Representative Robert Lighthizer, the White House has not yet made a final decision regarding the fate of these duties. In addition, the United States did not declare an amnesty in other restrictive areas - starting from Huawei, ending with sanctions lists against several dozen Chinese companies.
Nothing is known at all about counter steps from China. Only from the words of Donald Trump do we know that China decided to purchase agricultural products from the US for $40 billion, significantly increasing the volume of purchases (for example, last year, the Chinese purchased $20 billion from American farmers). This is really positive news for the US: but only China has not officially confirmed such intentions. The state-owned media in China are silent about this, just like official sources are silent. On the whole, Beijing has not yet commented on the results of the past meeting, without confirming or refuting reports of the agreements reached.
In other words, the talk that "from day to day" Beijing and Washington will sign a historic deal is extremely premature. Moreover, insider information began to arrive on the market, which indicates continuing differences. In particular, according to the sources of the American press, China at the talks said that the volume of purchases of agricultural products should, firstly, meet WTO standards, and secondly, meet the needs of Chinese importers, and not be artificially regulated, to please Washington. In addition, according to preliminary data, Beijing refused to reduce the volume of purchases of relevant products from other countries in favor of the United States. Given this position, it is not at all surprising that China is in no hurry to officially confirm Trump's words.
In general, the completed round of negotiations ended on a major note, in accordance with the principle where "the absence of bad results is a good result." However, it is worth noting that the most controversial and complex issues will be discussed at the second stage of negotiations, which is expected in November. It is, in particular, about protecting the intellectual property of US companies, subsidizing the industrial sphere of China and ending the forced transfer of technology to China. As part of the second stage of the dialogue, Trump and Xi Jinping are expected to meet, and according to the results of the third stage (in the first half of next year), the conclusion of a "historical deal" is expected.
But according to a number of experts, now it is impossible to speak with confidence about any temporary guidelines. At the moment, China is interested in negotiations lasting as long as possible: following this tactic, Beijing, on the one hand, "freezes" the conflict, avoiding new duties, and on the other hand, delaying the conclusion of the deal, given the upcoming presidential US elections. Therefore, the results of the first stage of the negotiations are "cosmetic" in nature: the parties, in fact, did not discuss the most difficult issues, which became a stumbling block in previous attempts to conclude an agreement. Beijing and Washington diverged in the corners of the ring, and there are no clear winners (however, like losers) in this meeting.
The US currency reacted to the events of the past week with cautious optimism. On Monday, the dollar index marginally rose, reflecting the general phlegm of the market. In addition, Columbus Day is celebrated in the United States today, so US trading floors will be closed. Now the focus will be on the comments of representatives of the Federal Reserve and the ECB, who should assess the situation in the context of the prospects for monetary policy. In my opinion, none of them will change their position on this issue: the split of opinions will continue both among the members of the European regulator and the American one. China and the United States were able to prevent a new round of trade war (and this is a good thing), but at the same time made it clear that the negotiation process would go on for many months (which is an absolute negative).
From a technical point of view, the bulls of the EUR/USD pair need to stay above 1.0990 (the middle line of the Bollinger Bands indicator, which coincides with the Kijun-sen line on the D1 timeframe). Otherwise, the bears will again seize the initiative, sending the price to the bottom of the 9th figure. To confirm further corrective growth, traders need to overcome the mark of 1.1075 (the upper line of the Bollinger Bands on the same time frame). On Friday, the bulls of the pair did not succeed in impulsively breaking through this resistance level, therefore, in this case, buyers need a powerful informational occasion. In the conditions of market silence, the pair is likely to trade within the flat band of 1,0990-1,1075.
