2 July 2019, OctaFX – The euro declined in the Asian session after the United States Trade Representative (USTR) office recommended tariffs worth more than $4 billion in Europe. These tariffs were suggested because of the illegal subsidies the EU gives its airline companies like Airbus.
The new tariffs will target products like olives, Scotch whiskey, and Italian cheese on top of the $21 billion tariffs that were announced in April this year. Europe will likely respond with its own tariffs, which will affect the trade of the two regions. In 2018, the combined trade volume of Europe and the United States was more than $1.2 trillion. Goods totaled more than $807 billion while services totaled more than $488 billion.
EURUSD technical analysis
The EURUSD pair declined sharply to a low of 1.1275, which was the lowest level since June 20. This was a continuation of a decline that started on June 28, when the pair formed a double bottom pattern as shown on the chart below.
The price is below the 14-day and 28-day moving averages and slightly above the 38.2% Fibonacci Retracement level. The RSI remains below the oversold level. The same is true with the money flow index. The downward momentum is likely to continue moving lower to test the 23.6% Fibonacci Retracement level of 1.1230.
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