The dollar index reached a local maximum yesterday, reaching 98.659. Interest in the US currency has grown significantly throughout the market amid a political scandal in the United States. Greenback took advantage of the "security island" status again using the period of increased uncertainty to his advantage. But despite the general offensive of dollar bulls, the EUR/USD pair could not overcome the support level of 1.0950. To be more precise, the sellers impulsively sold this target, however, they again failed to gain a foothold below it. During the Asian session, the pair showed a weak correction, indicating the fading of the southern impulse. Also, the topic of impeachment will also fade soon from my personal standpoint in the light of the transcript of a telephone conversation published yesterday between Trump and Zelensky.
The disclosed transcript of the conversation between the leaders of the two powers had an ambiguous effect in the context of the prospects for the impeachment procedure. On the one hand, Donald Trump did mention Biden and his son, who "did business" in Ukraine. The head of the White House unambiguously determined his intentions, asking Zelensky "for a favor" regarding the resumption of the criminal investigation, which was "hushed up" by Joe Biden with the help of the previous Ukrainian leadership. This fact can be interpreted as pressure and use of power for one's personal political gain.
However, many experts doubt that the published transcript will indeed lead to the resignation of the US president. The fact is that initially this situation was presented much more severely: according to the American press, Trump openly blackmailed the Ukrainian president, forcing him to open criminal proceedings against Biden's son in return for providing military assistance. But in fact, the head of the American state approached this issue quite subtly. First of all, in a conversation with Zelensky, he accused Biden that he was the one who exerted pressure on the previous Ukrainian authorities. The Prosecutor General was dismissed from his filing and his successor closed the criminal case against Hunter Biden. In this context, Trump told his Ukrainian counterpart that "many would like to know more about this situation," while asking him to "sort out the situation." In this case, not a word about the provision (or non-provision of military assistance) was given, keeping in mind the topic under discussion is not in the transcript.
Given this fact, many experts doubted that the Democrats would build such a powerful accusation on the basis of this transcript that would allow them to go through all stages of the impeachment procedure. The reaction of American politicians to the published transcript of the conversation is expectedly different depending on their party affiliation. Representatives of the Democrats called Trump's actions "mafia blackmail", continuing to demand his resignation. Hillary Clinton, who was his main competitor in 2016, called him "a traitor to the country."
But for the most part, the Republicans began to defend their party member. The most influential representatives of the party said that the Democrats were ahead of the events by starting the impeachment procedure without waiting for the transcript. Now, they are forced to escalate the situation, justifying their rash actions. Although in fact, according to the Republicans, there was nothing seditious in the conversation between the two leaders and above all, there was no "quid pro quo" (service for service). In light of the impeachment procedure, this is a key fact. One can treat the ethical side of the issue differently, but from a legal point of view, Trump did not violate a single point of any American law in the conversation, according to party bonuses.
In light of the upcoming US presidential election, there is no doubt that the Democrats are using this situation for their political goals. However, this situation may ultimately turn against them if they do not bring the impeachment procedure to its logical conclusion (and, apparently, this will happen). This is not the first time that Democrats have raised the issue of Trump's resignation, and each time they are defeated, not finding relevant evidence of the president's illegal actions. Another failure will consolidate their reputation as "witch hunters", and this fact will negatively affect the rating of both the Democratic Party itself and the rating of their presidential candidate. Given this nuance, one can assume that Democrats will continue to press for an investigation and impeachment of Donald Trump, with markets booming.
The euro-dollar pair is still moving in the wake of political events in the United States. The last time the official impeachment procedure was launched in Congress against Bill Clinton (the story of Monica Lewinsky). Ao the very fact of this move caused some turbulence in markets, but as soon as the market comes to the conclusion that this procedure is unpromising, traders will switch to other fundamental factors. At the forefront of events, there will again be rumors around the prospects of trade negotiations between Washington and Beijing.
As for the technical picture of the EUR/USD pair, it is still necessary to monitor the support level of 1.0950 (the lower line of the Bollinger Bands on the daily chart). Once again, the bears of the pair failed to break this level, succumbing to the onslaught of buyers. Therefore, in this price area, one can consider long positions with the aim of corrective growth in the region of 1.1020 (the middle line of Bollinger Bands is on the same timeframe).