The value of Euro against U.S. dollar gained close to 0.12 percent at 1.07933 on Friday, erasing yesterday’s loss and approaching 4-month high which could be seen as a strong resistance. Since at the beginning of March, the U.S. dollar index has plummeted massively by nearly 3 percent as the rising angst over Trump’s Health Vote.
Anxiety over prospects for the healthcare bill gave stocks and value of U.S. Dollar their largest weekly drop since the November presidential election. However, the House of Representatives cancelled the Healthcare Vote on Friday afternoon as they did not have enough votes to pass it. The U.S. dollar index has surprisingly seen little change as investors assessed the fallout from a failed health-care vote that has raised questions on Trump administration’s ability to push its pro-growth agenda through Congress.
Instead of striving to dismantle Obamacare for passing his supporting Healthcare, now President Donald Trump is expecting to pivoting hard towards its economic growth agenda, the centrepiece of which is tax reform.
The under-reaction of stock and forex market may prove that the death of the Republican healthcare is not the knife to the heart of the bull market that some had feared, but to prevent the market from crashing investors are now tempering expectations for the breadth of expected tax cuts.
As a dominator in the Eurozone, Germany’s private sector grew at the fastest pace in nearly six years in March demonstrated by a survey on Friday, suggesting an acceleration in growth for Europe’s largest economy in the first quarter.
Meanwhile, HIS Market’s Purchasing Managers’ Index for the euro area rose to 56.7 in March, the high record in almost six years, and well ahead of economist expectations for 55.8. In Germany the composite PMI rose to 57 for the month, while there was also good news for the French economy where a similar gauge jumped to 57.6.
However, we should not be over-optimistic about the economic surge in Europe, since the uncertainty on the French presidential election poses a threat to the prospects for Eurozone’s future. The European Union will disappear, French presidential candidate Marine Le Pen told a rally on Sunday, promising to shield France from globalisation as she sought to fire up her supporters in the final four weeks before voting gets underway.
Technically the value of Euro against U.S. dollar is just breaking out the key resistance, currently trading above the 4-month high for potentially maintaining current momentum.
For analysing the pattern over the past 4 months, it shows a head and shoulder reversal pattern that may prove it currently locates at the bottom, awaiting more gains in the future. If the rate does not turn back below the resistance for reversal, traders may look for good prospects for long buying afterwards. The best place for buying would be at the position when it return to the key resistance and does not breakout. Moreover, this two-week surge led to the reversal of the MA (60) which indicates the performance over the long term period and is considered to be a support line, suggesting good prospects for the future movement.
Chart 1: EURUSD Daily
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