EUR/USD analysis: dollar eases on Trump tax announcement

EUR/USD Current price: 1.0896

The greenback closed the day higher against its major rivals, bolstered by hopes the US White House will announce the so long promised tax reform somehow during the day, rather than on the “official” release. The American dollar advanced ahead of Trump unveiling its plan, easing modestly afterwards, as the US administration failed to  clarify how they plan to pay for these tax deductions, although higher taxes to imports have been mentioned. Furthermore, the plan presents different scales of reduction, benefiting the most high-income taxpayers that would receive the biggest cuts, both in dollar terms and as a percentage of income. Additionally, the actual administration is considering an executive order on withdrawing the US from the NAFTA, hitting particularly the Mexican Peso and the CAD. Market’s attention is now centered on Thursday’s ECB monetary policy meeting, with mounting speculation that Mr. Draghi will present a change in the bank’s guidance towards future moves, as growth continued to be solid in the region.

The EUR/USD pair fell down to 1.855 its lowest for the week, but bounced modestly from the level, ending the day around the 1.0900 threshold, maintaining the positive tone, despite the intraday decline. In the  4 hours chart, technical readings support additional recoveries, as indicators have corrected extreme overbought conditions, but pared their decline within positive territory, turning modestly higher ahead of Wall Street’s close, whilst the intraday decline was quickly reversed after the price briefly slide below a bullish 20 SMA. Still, the price needs to surpass the 1.0930/50 region, where the pair presents the 61.8% retracement of the post-US election decline and the recently achieved yearly high, to be  able to extend its gains towards the critical 1.1000 level.

Support levels: 1.0865 1.0820 1.0785

Resistance levels: 1.0950 1.1000 1.1045