Euro Slides in Thin Trading Session on EU-US Trade War Headlines
Market Alert: Trump Expands US-led Trade Wars
- The United States Trade Representative announced that it is moving forward with its investigation over the French digital tax and will release its findings on Monday, December 2.
- Speculation has arisen that US President Donald Trump will open a new front on the US-led trade wars, turning his attention to the EU.
- The Euro has slid while the US Dollar has gained ground versus its counterparts following the EU-US trade war headlines.
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Focus on the US-China trade war has temporarily shifted, although not off the topic of tariffs. This time, US President Donald Trump has turned his attention to the European Union. By all accounts, it appears that a new front will open in the US-led trade wars.
“The United States Trade Representative is in the process of completing its investigation, under Section 301 of the Trade Act of 1974, of France’s Digital Services Tax (DST) and intends to issue its report in that investigation on Monday, December 2, 2019. At that time, the United States Trade Representative also will announce any proposed action in the investigation.”
Much like the reaction of the Chinese Yuan around negative US-China trade war headlines, the Euro took a dive below 1.1000 versus the US Dollar during the thinly-traded pre-Thanksgiving holiday session. There has been some speculation that a response to the French digital tax may only be the beginning of an expanded EU-US trade war. If so, more weakness for the Euro may be on the way.
EUR/USD RATE TECHNICAL ANALYSIS: 1-minute CHART (NOVEMBER 27, 2019 INTRADAY)
Following the news report, EUR/USD dropped from its near-session highs at 1.1013 to fresh session lows at 1.0993. At the time this note was written, EUR/USD was back at 1.0999. Although the Thanksgiving trading period tends to be quieter, it’s important for traders to remember that something as simple as a tweet could upend a low volume market very easily.
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--- Written by Christopher Vecchio, CFA, Senior Currency Strategist
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