FX.co ★ EUR/USD: The US and China has reached the first phase of the trade agreement. Reports on manufacturing activity in Germany and the eurozone may cause a decline on the euro.

China and the United States was able to find a common language and agree on mutual concessions in the first phase of the trade agreement between the two countries. On Friday, US President Donald Trump announced the upcoming reduction of duties to 7.5% on some goods from China, and canceled the new duties planned for December 15. This was done after China, within the framework of the agreement, agreed to huge purchases of agricultural products and a number of other energy products. It is expected that China will acquire US agricultural products worth about $ 50 billion, and will do so quite soon. However, it is worth noting that duties of 25% on other Chinese imports will continue to be maintained, which will be a certain lever of pressure on China in further negotiations.

In a later statement, US trade representative Lighthizer noted that while the trade agreement with China provides for the purchase of agricultural products by China for at least $ 40 billion, the actual goal is to achieve purchases of $ 50 billion, and is generally aimed at increasing US exports to China by $ 200 billion in over two years. It should also be noted that the text of the first phase of the agreement will not be available for at least a few more weeks.

In his Twitter, Trump called the agreement with China phenomenal, and called for immediate negotiations on the second phase.

Data on US retail sales, which grew at a more moderate pace in November than before, indicate that the start of the holiday shopping period has only shifted slightly. According to the report of the US Department of Commerce, consumer spending of Americans in November of this year, compared to October, increased by only 0.2% and volume to 528 billion dollars. Economists had forecasted November growth to be 0.5%. If we do not take into account the volatile categories, the sales in November generally remained unchanged.

Experts note that the decline in sales is directly related to holiday gifts, which will increase in December this year. Meanwhile, Americans spending in bars and restaurants fell by 0.3% last month.

A rise in import prices could also, to some extent, provide support to the US dollar. According to the labor department, import prices in the United States in November 2019 increased by 0.2% compared to October, which fully coincided with the forecasts of economists. Import prices also fell by 1.3% compared to November 2018, whereas US export prices rose 0.2% in November compared to October, and were down by 1.3% from November of the previous year.

Another good indicator is the growth on inventories. According to the data, the volume increased by 0.2% compared to the previous month and settled to 2.043 trillion dollars, which completely coincided with economists' forecasts. Inventories in the manufacturing sector rose by only 0.1%, while in retail trade, the increase was just 0.3%.

New York Fed President John Williams' speech on Friday did not affect the market much. He also mostly talked about the fact that the US labor market needs to become more efficient and strong, and that the Fed is close to meeting its employment and inflation goals. He also mentioned that the economy is looking pretty good. According to his expectations, inflation will rise up to 2% in the next year or two. He also mentioned the rise in the housing market, which came amid lower rates, and are helping to stimulate the economy. He forecast GDP to grow about 2% next year.

As for the technical picture of the EUR / USD pair, the upward trend is gradually slowing, and the growth of risky assets caused by the British election results has gradually come to naught. At the moment, the bears will continue to push the trading instrument below the support of 1.1110, which will lead to the lows of 1.1070 and 1.1040. Reports on manufacturing activity in Germany and the eurozone may most likely limit upward corrections, so buyers of the euro may encounter problems in the resistance area of 1.1160. Larger players will prefer the protection of the 1.1200 level, which is a kind of psychological mark. A breakthrough of which will lead to the continuation of the upward trend of the European currency.