The euro bulls are not afraid, and the EU’s tough stance is to support it.
The weekly cycle of the euro against the dollar closed above the downward trend of 2018-2019, which completed a falling wedge pattern. Although the euro avoided a tariff war on Monday due to an agreement between the United States and Mexico, it provided some support to the dollar and was suppressed.
The exchange rate breakout wedge will often lead to a strong and sustained rise, with a final target of 1.2000. The 200-day moving average will be tested at 1.1364 and the 2019 high of 1.1570, with support at 1.1235 and 1.1175. However, its weekly line needs to stand above 1.1347 to attract enough buyers to push the exchange rate to close at the 2019 high of 1.1570.
To impose tariffs on French wines
US President Trump on Tuesday (June 11) waved his tariffs to his European ally, France. Trump went to France to participate in the 75th anniversary of the Normandy landing on June 6 and held bilateral talks with President Mark Long. One of the core issues discussed by the two sides was the trade policy.
Just four days after visiting France, Trump said that French wines can enter the United States duty-free, while American wines are subject to tariffs imposed by France. This arrangement is unfair, and the United States will "do something" about French wine tariffs. He complained: "France collects a lot of money on wine. But we impose very few tariffs on French wines." Trump revealed that there are American wine merchants protesting against him on this issue, so he will do something about it. ", suggesting that tariffs will be imposed on French wines.
Between France and the United States, if only from the liquor trade, France did achieve a considerable trade surplus with the United States; however, if the total trade volume of the country is concerned, France has no obvious trade surplus with the United States.
"Customs are coming" has scared the euro long
France is a major member of the European Union. Trump knows the influence of France on the US-European free trade negotiations. However, he lacks the patience to respond to the concerns of the other side through negotiations. He is more willing to wave the tariff bar to "extreme pressure" to force the French government. Concessions were made. In May last year, the United States announced that it would impose a 25% steel tariff on the European Union, a 10% aluminum tariff, an aviation subsidy dispute in April this year, and the upcoming tariff on wine.
Trump intends to use the means of tariffs to release warning signs to the EU, urging the EU to start the free trade negotiations with the US "three zeros" (ie: zero tariffs, zero non-tariff barriers and zero subsidies). However, the negotiations between the two sides have already broken down: the agricultural negotiations are the real goal of Trump for the EU. The Trump administration insists that if the EU wants to reach a trade agreement, it must integrate agriculture into the negotiations, while the EU insists on agriculture. It has never been the subject of trade negotiations in Europe and the United States.
Mark Long called on Europe to "defend its own interests." On Friday, on the eve of Trump‘s visit to Britain and France, he publicly delivered a speech in English. He sternly criticized Trump for setting tariffs on "unreasonable grounds" and stirring the practice of trade wars everywhere. Europe “must defend its own interests and take new measures in this regard”. The move marks a change in France‘s attitude towards the Trump administration, along with its important German ally Merkel.