EUR/USD shoots while the US credit reduction hits the US dollar

• The EUR/USD wins strongly to about 1,1290, since the US dollar has been drastically beaten after Moody’s reduced the sovereign credit rating of the USA to AA1.
• Operators expect the Fed not to cut interest rates in the next two policy meetings.
• Investors expect the announcement of a possible commercial agreement between the EU and the United Kingdom.

EUR/USD It quotes 0.85% higher, about 1,1290 during negotiation hours in North America on Monday. The main currency pair is strengthened as the US dollar (USD) does not yield as its peers due to erosion in the sovereign credit rating of the United States (USA). The US dollar index (DXY), which tracks the value of the dollar against six main currencies, slides about 100.20.

On Friday, Moody’s reduced the long -term emitter ratings and non -guaranteed senior debt from the US to AA1 from AAA. The reduction of a level in the US sovereign rating occurred due to growing fiscal problems, that market experts believe that the administration cannot address in the short term.

The erosion of the credit in the US has resulted in a drastic increase in the yields of the treasure bonds, with investors discounting the risk premium. The yields of the 10 -year Treasury bonds have risen 2.3% to about 4.54%, at the time of writing. In addition, financial market participants are concerned that the so -called ‘great and beautiful bill’ of the White House further drives the yields of US bonds.

Meanwhile, the growing optimism on a possible commercial agreement between the US and China is expected to support the US dollar. During the weekend, US President Donald Trump said positively in an interview with Fox News when asked if he would visit China for direct commercial conversations with President Xi Jinping.

During the negotiation hours in Europe, the Economic Advisor of the White House, Kevin Hassett, also expressed confidence in closing more commercial agreements this week, but did not mention any commercial partners. “I would not be surprised if there are more commercial agreements this week,” said Hasett.

In the front of monetary policy, operators are increasingly sure that Federal Reserve (Fed) will not reduce interest rates in the next two policy meetings due to the high expectations of consumer inflation after tariffs imposed by President Trump. Meanwhile, Fed officials are also more inclined to reduce consumer inflation expectations than to act prematurely reducing interest rates to provide temporary support to possible economic shock waves. “At this time, we [la Fed] We see more risk of high inflation than on the side of the use of the mandate “, The president of the Atlanta Fed Bank said Raphael Bostic, in an interview with CNBC during negotiation hours in North America.

Daily summary of market movements: EUR/USD works strongly while ECB officials support more interest rate cuts

• The pure strength in the Eur/USD is also driven by the superior yield of the euro (EUR) at the beginning of the week. The main currency works strongly before the announcement of a possible commercial agreement between the European Union (EU) and the United Kingdom (UK) later in the day, the first from the announcement of Brexit.
• The EU and the United Kingdom are expected to announce a commercial pact in various industries, such as defense, agriculture and energy. Strengthening economic ties among the neighboring economies of Europe at a time when eurozone inflation has decreased significantly, The European Central Bank (ECB) It has substantially reduced its interest rates, and the German economy is on a path of tax reforms, which is favorable for the growth prospects of the continent.
• In addition, the ECB is expected to reduce its interest rates even more due to growing concerns about Growth and eurozone inflation. The BCE policy and governor of the Belgian Central Bank, Pierre Wunsch, declared in an interview with the Financial Times (FT) during the weekend that interest rates would be slightly below 2% amid risks downward for inflation and growth. Wunsch warned that tariffs imposed by President Trump have pushed “the risks to downward inflation.” He ruled out the possibility of a “cut of interest rates than usual” in the predictable future.
• The next great trigger for the euro will be the commercial conversations between Washington and Brussels. Meanwhile, the EU Commission of Commerce, Maroš šefčovič, declared in an interview with the FT during the weekend that the continent intends to buy gas, weapons and agricultural products from the USA to reduce the commercial deficit between the US and the EU. ŠEFčovič said he would meet with the US commercial representative, Jamieson Greer, next month at a ministerial meeting of the OECD in Paris.
• Economics capital analysts suspect that the commercial agreement between the EU and the US is imminent, since Washington has not shown urgency to resolve commercial disputes with the continent of the way he has done with China, Japan and India. Another reason behind the slowest progress in commercial conversations between the US and the EU is the difficulty of the continent to achieve consensus among the 27 Member States.

Technical Analysis: The EUR/USD seeks more rises about 1,1300

EUR/USD About 1,1270 is recovered at the beginning of the week. The short -term perspective of the torque has become bullish since it manages to maintain the exponential (EMA) mobile average of 20 days, which is around 1,1214.

The relative force index (RSI) of 14 periods is strongly recovered above 50.00 after sliding about 40.00, suggesting an increase in the bullish impulse.

Looking up, the maximum of April 28, 1,1425 will be the main resistance for the pair. On the contrary, the psychological level of 1.1000 will be a key support for the euros of the euro.