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Europe Feels the Squeeze

May 27, 2019
BY Emma Richards

Politics and power struggles are always in the news, and history has a tendency of repeating, but this year we are seeing something quite different. The EU has had its fair share of struggles, but now it’s feeling pressure from both east and west. President Donald Trump and President Vladimir Putin have found common ground, and it seems clear that they are both focusing on destabilizing Europe. Can these two superpowers shake the EU and just how will the EUR react to the pressure?

The EU and the US

The EU has struggled to maintain an amicable relationship with the US since Trump first took the presidency in 2016. Policy differences in nationalism, trading relations, and climate change kept these two unions from moving into the future in harmony. And now in 2019, Trump seems ready to expand his trade war to the European front.

“The World Trade Organization finds that the European Union subsidies to Airbus has [sic] adversely impacted the United States, which will now put Tariffs on $11 Billion of EU products! The EU has taken advantage of the U.S. on trade for many years. It will soon stop!”

US President Donald Trump

The EU has not made any hard moves to support the US in its anti-China trade war, which may have revived Trump’s previous threats to impose a 20% duty on European car imports. Does Trump plan to go to (trade) war with everyone?

The EU and Russia

The EU’s relationship with Putin has never been a good one, but when Moscow annexed Crimea in 2014, the EU responded with sanctions that locked the door to diplomatic relations and threw away the key. Since then, Russia has made an effort to fuel populist parties in countries such as Hungary and the Czech Republic—further cracking the fragile unity of the EU.

While political analysts claim Russia is financing many of the nationalistic parties throughout the EU, there is no specific paper trail leading to the Kremlin. EU polls indicate that nationalist parties could gain seats in the European Parliament in the coming election, which will likely affect alliances all across the EU.

Trading the EUR

This month’s EURUSD downtrend could be the start of a massive market move.

Trading EUR Pressure

Short-term: This month’s EURUSD downtrend could be the start of a massive market move.

The euro isn’t faring well against either the Russian ruble or the US dollar right now. Of course, forex traders have the option of profiting from a Sell order whenever a bearish trend presents, but as we’ve seen so many times before, the markets can change in a lunch hour and losses can occur when you least expect them, so be sure to have Stop Loss or Trailing Stop whenever setting orders.

Long-Term: EURUSD has been falling with consistency, but it has been lower.

Since both the trend and the trading volume is down, expecting a reversal anytime soon would be—perhaps—overly optimistic. To sum it all up, both technical and fundamental analysis don’t paint a pretty picture for EUR as the price passes resistance, possibly heading for 2017 lows of 1.05. There’s a lot to consider when it comes to forecasting the EUR, so watch the charts daily and make your own investigation before setting orders.

Follow the trend but be ready for a price bounce

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