The main event yesterday, which somewhat confused the markets, was the agreement between the U.S. and China to return to the mutual tariffs that were in place before April 2. This means tariffs on Chinese goods will be reduced from 145% to 30%, and on American goods from 125% to 10%. The agreement will be valid for 90 days. According to Trump, negotiations on structural issues are ongoing.
As a result, the S&P 500 rose by 3.26%, the dollar index gained 1.43%, and the euro fell by 136 pips without closing the gap.
We are not rushing to conclusions and do not believe the euro will continue to fall to the nearest target support at 1.0955 unless the price consolidates below the MACD line on the daily chart. For that, today must close with a bearish candle. The stock market has risen strongly since April 22, while the euro has not embraced this risk sentiment yet. We believe the time has come. A breakout above the 1.1110/50 range would confirm a shift in sentiment toward the euro. The next target would open at 1.1276.
On the four-hour chart, the Marlin oscillator is rising ahead of the price, which signals further price growth. Currently, the price is pressing against the lower boundary of the target range, but it needs to break through the upper boundary.
Today's ZEW Economic Sentiment Index for May could stimulate risk appetite – the forecast is -4.4 vs. -18.5 in April.
