EUR/USD Under Pressure Double-bottom In Danger

The EUR/USD is trading in the mid-1.1500s, down on the day but at similar levels to those seen in Tuesday’s European session. The US Dollar pared its gains late on Tuesday and resumed its rally on Wednesday. A mounting number of concerns weighs on the mood and strengthens the greenback against its peers.

South Africa joined the ranks of Emerging Markets that cause concerns. The Rainbow nation reported a contraction in Q2, thus officially putting the country in a state of recession. The Rand lost ground. Argentina is in intense negotiations with the International Monetary Fund to secure funds as the Peso remains on the back foot. Closer to Europe, the Turkish Lira has stabilized, albeit at low ground.

Italy is eyed as well. The euro zone’s third-largest economy is set to unveil its budget and has repeatedly pledged not to breach the area’s budgetary rules. Social programs and tax cuts are on the agenda. The spread between yields of Italian and benchmark German bonds is eyed.

NAFTA talks resume in Washington as Canada toughens its positions in the negotiations. It may have some leverage as the US Congress is keen on including the northern neighbor in the agreement.

More importantly, financial markets await the US decision regarding China. The whopping tariffs on $200 billion of Chinese goods are due as early as Thursday.

The US ISM Manufacturing PMI came out at 61.3 points on Monday, far better than expected. The forward-looking indicator is at the highest levels since 2004. The number is a positive hint towards Friday’s Non-Farm Payrolls and also emboldens the Fed when it comes to raising rates. The report included some concerns about trade, but these were easily overshadowed by the robust economic activity.

Euro-zone services PMI’s broadly met expectations with the final measure for the component confirmed at 54.4 points in August.