Focus on the USD / CNH and the Fed's powell

• The EUR / USD and the USD / CNH show a high degree of correlation.
• The euro could attack if CNH abandoned its commercial concerns.
• The US dollar could also be buying if Powell from the Fed looked hawkish.

The EUR / USD is on the defensive, having closed yesterday under 1.1315 (61.8% FibR of 1.1215 / 1.1472).

The bearish closing took place as the Fed's hawkish Clarida comments and mounting trade tensions put a bid on the US dollar.

The breakout of Bull in USD / CNH could be expensive at EUR

Trapped in a shrinking price range, the USD / CNH (offshore yuan exchange rate) pair traced a doji torch yesterday, signaling indecision in the market, even though Trump said that he was "out of control". it was "very unlikely" that he would accept China's request to stay behind the higher tariffs, which is expected to come into effect on Jan. 1.

CNH's resilience to the resumption of commercial concerns casts doubt on the sustainability of the losses seen yesterday by the EUR / USD. Indeed, the correlation between the two pairs has gone from 0.45 to 0.77 in the last few days.

The strengthening of the correlation also means that the euro could suffer a defeat if the USD / CNH saw a symmetrical triangle breakout in the face of mounting trade tensions.

Fed Powell to speak at 17:00 GMT

The tone of the offer around the US dollar could strengthen if Fed Chairman Powell reaffirmed the process of gradual tightening and provided that the rates should exceed the neutral level for some time. The EUR / USD could, however, attract bids if Powell puts more emphasis on the growing risks to the US economy.

The preliminary estimate of US GDP in the third quarter, scheduled for publication at 13:30 GMT, and the ECB also have an influence on the couple.

Technical levels EUR / USD