Notwithstanding the pressing risks to the US economy, with the trade war at the top of the list, and the reduction in interest rates by the Fed, the US Dollar has been consistently bullish in performance since the beginning of 2018, recovering from $1.255 against the Euro in February 2018 to $1.087 at the end of September this year. The fundamentals for this force against the single currency are relatively simple, beyond the uncertainty about Brexit’s effectiveness and its consequences if it becomes a reality, the eurozone economy, particularly the German, the largest in the group, is very close to touching recessionary territory and is also being penalized by the conflict between the two largest economies in the world, as they are the first (USA) and third (China) largest customers of German exports.
Following a rebound during the month of September, the EUR/USD made a double top that pushed the asset to the $1.10 level and is now about to break that level which would leave free space on the currency pair for a test of the September lows, or even the $1.034 reached in January 2017. On the other hand, GBP/USD is a different story, as I mentioned before there is a long-term double bottom active that could lead the British Pound to sharply rise against the US dollar to the $1.60 zone.
