FX.co ★ EUR/USD: the dollar is back on the horse and the euro may resume its peak

The divergence in the economic growth of the United States and the eurozone made it possible for the EUR/USD pair to test the lower boundary of the short-term consolidation range of 1.0995-1.1095.

The index of business activity in the US manufacturing sector reached a five-month high in September, while its European counterpart fell from 47 to 45.6, which is the lowest level in almost seven years.

Speaking on the eve of the European Parliament, ECB President Mario Draghi warned that a downturn in the eurozone manufacturing sector risks spreading to other sectors of the region's economy.

He sees the need to stimulate it and says that the ECB is ready to use all available tools, which implies the possibility of further easing the policy of the central bank.

It should be noted that this was the last speech of Draghi in the European Parliament: his eight-year term comes to an end on October 31.

His successor to the presidency of the ECB - Christine Lagarde - believes that the US-China trade war poses the greatest threat to the global economy.

According to her, the mutual duties of Washington and Beijing will reduce global GDP growth by 0.8% in 2020.

Obviously, trade conflicts hinder the economies of any state, and central banks are trying to counter this by easing monetary policy.

In this regard, the ECB should not be surprised at the large-scale monetary stimulus. Indeed, the eurozone is one of the most affected by the trade conflict of the United States and China.

The strengthening of the greenback in response to another Fed rate cut by 25 basis points does not seem paradoxical. While other central banks will seek to smooth out the negativity from trade wars, easing monetary policy, the currencies issued by them will weaken. This view is held by many large banks, including MUFG.

According to Morgan Stanley, the "bearish" factor for the greenback will be the growth of US excess reserves. In this regard, the renewed Federal Reserve Bank of New York for the first time since 2008, repo operations may play a cruel joke with sellers of EUR/USD.

While the current head of the Federal Reserve Bank of New York, John Williams, praises the Federal Reserve for developing the right plan and its implementation (recall, the central bank offered to buy securities with an obligation to repurchase them in the amount of up to $75 billion daily until October 10), former head of the financial institution William Dudley believes that the regulator has no choice but to build a balance with the help of reviving QE.

However, while the bears in EUR/USD are set to continue the downward movement. It is assumed that the pair may retreat to annual lows near the 1.0920 mark if in the near future the bulls will not be able to take the 1.10 mark and gain a foothold above it.