EUR/USD flirts with 1.24 amid Russian sanctions uncertainties

• The US dollar weakness is bringing EUR/USD up, close to 1.24 handle.
• Uncertainties over Russian and Chinse sanctions weigh on the greenback. 

The EUR/USD is trading in the 1.2380 region up 0.36% on the first day of the week as the US dollar weakness and the geopolitical-tense context are the main drivers.

The euro bulls on Monday benefitted from the negative sentiment on the US dollar. Even positive US Retail Sales earlier in the day sparked renewed greenback dumping and brought the single currency as high as 1.2395 flirting with the 1.24 handle. 

Early on Monday, Trump accused China and Russia to be currency manipulators devaluing their national currencies in order to gain a commercial advantage. 

“Russia and China are playing the Currency Devaluation game as the U.S. keeps raising interest rates. Not acceptable!” tweeted President Trump on Monday and the US dollar dropped. 

However, Trump did not provide evidence to back up his claim. Trump’s comments are “another implicit signal of the administration’s desire for a weaker U.S. dollar -- especially against major trading partners. These weak dollar expectations will remain entrenched in currency markets, especially if the administration continues its mercantilist policy focus,” said Viraj Patel, currency strategist at ING Group NV. 

The airstrike on Syria has been shrugged off by the market which considers it as a one-time event and not the start of a war. US stocks gapped up at the open and were well-supported throughout the day. However, it is still not clear what will happen with Russia. 

Meanwhile, the latest news report that Trump has finally no intention to implement sanctions on Russia just yet. “Administration officials said Monday it was unlikely Trump would approve any additional sanctions without another triggering event by Russia, describing the strategy as being in a holding pattern,” says the Washinton Post.

Therefore negating the statement made on Sunday by Nikki Haley, the US Ambassador to the UN, which said that the US was getting ready to sanction Russia. There had been “confusion internally of what the plan was.” according to a White House official. “The sanctions were developed in recent weeks as part of a ready menu of potential military and economic measures for Trump to enact to strike back at Assad’s government and his Russian patrons, according to a senior administration official,” as reported by the Washington Post. 

Looking ahead, Tuesday will see four Federal reserve officials delivering speeches as well as tier-two data with US Industrial Production, Housing Starts, and Building Permits. While in the euro area, investors will scrutinize the ZEW Survey numbers for April at 9:00 GMT. 

EUR/USD technical outlook:

“The pair is technically bullish short-term, although still inside a familiar range, having topped for the day just 1 pip below last week's high of 1.2395. In the 4 hours chart, the pair has advanced above all of its moving averages that anyway continue lacking directional strength, but the Momentum indicator maintains its bullish slope well above its 100 level, while the RSI indicator also advances, although at a more moderate pace around 65, all of which supports further gains, now eyeing the 1.2440 region, where the pair has a daily descendant trend line coming from this year high at 1.2554.” according to Valeria Bednarik, Chief Analyst at FXStreet.