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On Thursday the 22nd of March, trading on the euro closed down. The rate dropped to 1.2285 during the European session. The single currency was pushed down by a multitude of factors, including a drop in German bond yields, the EURGBP cross, and weak German and Eurozone data.

From its session low of 1.2285, the euro recovered to reach 1.2341. A rise in tensions between the US and China over trade relations sent stock indices tumbling. This, in turn increased demand for safe haven assets (JPY, CHF).

On Thursday, President Trump signed a memorandum taking trade measures against Beijing (with the possibility of tariffs on up to 60bn USD worth of Chinese goods) in order to address the trade deficit between the two countries, which stands at around half a trillion USD.

US data:

• Markit manufacturing PMI (Mar): 55.7 (forecast: 56.0, previous: 56.3).
• Markit services PMI (Mar): 54.1 (forecast: 56.1, previous: 56.3).
• Initial jobless claims: 229,000 (forecast: 225,000, previous: 226,000).

Day’s news (GMT+3):

• 15:00 UK: BoE quarterly bulletin.
• 15:30 Canada: CPI (Feb), retail sales (Jan).
• 15:30 USA: durable goods orders (Feb).
• 17:00 USA: new home sales (Feb).
• 21:00 USA: Baker Hughes US oil rig count.

Fig 1. EURUSD hourly chart. Source: TradingView

After testing the trend line yesterday, the euro dropped to 1.2285. From here, it recovered by 45 degrees to reach 1.2341. Asian stocks have opened down today, which has propped up demand for the yen and franc.

As the Asian session got underway, the US dollar dropped against all the majors. Given that the main euro crosses are trading up and that Chinese stocks are way down, I’m going to predict that the euro will continue to rise right through the first half of the European session.

According to my projections, the euro will reach the 67th degree at 1.2368. From here, I’m expecting the euro to drop to 1.2317. The technical picture is still forming, so it’s not entirely clear at the moment.