Meanwhile, as demand for risk assets gradually returns, information has surfaced online that the European Union does not intend to abandon its plans and is preparing to propose to the United States a plan for implementing the next stage of the trade agreement reached by the two sides this summer.
This step is being taken ahead of a meeting between the EU Commissioner for External Trade, Maros Sefcovic, and his American counterparts, which is expected to take place at the end of this month. The main goal of this stage is to reduce trade barriers and simplify procedures in areas of mutual interest. These include the digital economy, energy, steel and rare earth metal exports, and, of course, issues related to industry and manufacturing.
The European Union is ready to make a number of concessions to demonstrate its commitment to the principles of free trade and to strengthen transatlantic ties. This move is also a response to proposals sent by Washington to Brussels earlier this year, demanding the development of a legally binding plan to revise EU regulations that, according to the U.S., harm American businesses.
It should be recalled that the agreement reached in August between European Commission President Ursula von der Leyen and U.S. President Donald Trump established a 15% tariff on most EU goods imported into the United States. However, it also included commitments to continue working on issues such as steel exports and non-tariff barriers.
The 15% tariff also applies to automobiles, which clearly does not satisfy Germany and EU authorities, who are striving to reduce it by all possible means. The bloc also plans to introduce legislation to eliminate tariffs on U.S. industrial goods and certain non-sensitive agricultural exports.
It is worth noting that the EU still faces a 50% tariff on steel and aluminum exports, as well as on many derivative products. The European Commission, which handles the bloc's trade matters, advocates a quota system that would allow tariff reductions for certain volumes of metal exports. The proposed action plan also envisions the creation of an economic security working group that would focus on issues such as investment screening, export controls, procurement, and the supply of critical raw materials.
On the currency market, the proposed initiatives have found no reflection.
As for the current technical outlook for EUR/USD, buyers now need to figure out how to take the 1.1640 level. Only this will allow them to target a test of 1.1668. From there, it may be possible to climb to 1.1700, though doing so without support from major players will be quite challenging. The farthest target remains the 1.1731 high. In case the instrument declines, I expect some serious buying activity around the 1.1600 level. If no buyers appear there, it would be better to wait for a renewal of the 1.1580 low or open long positions from 1.1640.
As for the current technical picture for GBP/USD, pound buyers need to take the nearest resistance at 1.3180. Only this will allow them to target 1.3215, above which it will be rather difficult to break through. The farthest target will be the 1.3244 level. In case of a drop in the pair, bears will try to regain control around 1.3133. If they succeed, a breakout of this range would deal a serious blow to the bulls' positions and push GBP/USD down to the 1.3085 low, with prospects of reaching 1.3050.
