EUR / USD: from Brexit to G20

The dollar index was again in the region of 97 points, reflecting the demand for US currency throughout the market. Traders resumed risk aversion amid increased uncertainty, both about Brexit's prospects and about the prospects for US-China relations. And if London's "divorce proceedings" with Brussels took a pause until December 10 (the approximate date of the vote in the British parliament), then the fate of a trade war will be decided in the coming days. At the end of this week, namely on November 30 and December 1, the G-20 summit will take place in Argentina, which traditionally attracts the attention of traders.

This year, the stakes are especially high. The fact is that the long-awaited meeting of Donald Trump and Chinese President Xi Jinping will take place on the G20 margins. This will be the first full-fledged one-on-one dialogue after the start of a large-scale trade war. The outcome of this meeting is difficult to overestimate. Based on the results of the negotiations, the United States and China will either take the path of normalizing relations or exacerbate the trade conflict. Moreover, as warned at the White House, the failure of negotiations is fraught with a "cold war". According to US Vice President Mike Pence, the US economy can withstand such an escalation in relations.

On the other side of the scale is a broad bargain. As Trump said recently, China "really wants" to conclude a trade agreement, but the working groups are still negotiating, so it's too early to talk about any preliminary agreements. This week, the American president tightened his rhetoric, putting pressure on Beijing. In particular, he said that on January 1, he would increase duties from 10% to 25% on imports of a number of Chinese goods by another $ 257 billion. This will be the first (but not the only) step of Washington if the parties fail to agree in Buenos Aires.

It is worth noting that quite a little is known about the details of the negotiation process. According to Trump, the Americans insist that China open its country to competition from the States. Beijing, in turn, proposes to focus on another aspect, reducing primarily the imbalance in trade in goods. Let me remind you that the Chinese surplus in trade with the United States last year amounted to $ 420 billion. This year, this trend continues, despite the trade war. In this regard, the Chinese are proposing a sharp increase in imports of American products, in particular, raw materials.

Thus, the conceptual approach to solving the problem of the Chinese and Americans is significantly different. According to the American press, Washington makes Beijing a list of broader requirements, the scope of which goes beyond the boundaries of foreign trade. We are talking about violations of intellectual property rights of US companies, as well as the action of Chinese state programs for the development of innovative industries. In addition, the dynamics of the implementation of the national strategy Made in China 2025 frankly scares the Americans (not the first year), so it is important for Washington to restrain the Middle Kingdom in this context.

In other words, the financial world is again waiting for a key event. And although, as acknowledged by the parties, at the G20 summit, in any case, there will be no trade deal, Trump and Xi Jinping can agree on a basis for further negotiations. At the moment, contradictory information comes to the market. Representatives of the White House mainly take a skeptical stance, saying that a compromise has not yet been found. But Beijing reports some progress. As the spokesman for the Chinese Ministry of Foreign Affairs said today, the leaders of the two countries had agreed in advance by telephone to reach mutually beneficial agreements.

However, there is still no reliable information on this issue, so traders prefer to wait, gradually increasing their dollar positions. A pair of euro-dollar against the background of a controversial fundamental background remains within the flat, although the strengthening of the American currency leads the pair to the base of the 13th figure. By the end of the week, such uncertainty will continue, so the dollar will continue to be in demand, strengthening the position of bears EUR / USD.

From a technical point of view, the basis of the 13th figure is not a level of support, so today this target will surely be passed. The nearest support level is 1.1245 (the bottom line of the Bollinger Bands indicator on the daily chart). In general, the downward movement prevails over the pair, the Ichimoku Kinko Hyo indicator has formed a bearish Parade of Lines signal, in which the price is under all its main lines and under the Kumo cloud. Secondly, the pair is between the middle and lower lines of the Bollinger Bands indicator, which also points to the southern trend.