An interesting confrontation is shaping up in the US presidential race. With Joe Biden dropping out, a strong opponent has emerged for the Republican candidate. The rising popularity of Kamala Harris has made investors step back from Trump trading, allowing EUR/USD to find some footing. The bulls were still being determined even by weak European business activity data.

A Morning Consult poll showed that Joe Biden's exit from the race narrowed the gap between the main Democratic candidate and the Republican from 6 to 2 percentage points. The NPR/PBS News/Marist poll indicates a one-point difference, while a Reuters/Ipsos survey shows Kamala Harris leading Donald Trump by two percentage points. Republicans called this the honeymoon period for the new Democratic nominee, but it's noteworthy that Democrats started strong, raising $100 million in donations.

Dynamics of Presidential Candidates' Ratings

If former prosecutor Harris manages to expose Trump, who faces 34 charges, and wins the election, everything will fall into place. She is already making strides. As vice president, she won't interfere with the Federal Reserve's policies, allowing the central bank to lower the federal funds rate as expected in September. The chances of a rate cut in September returned to 100% after the presidential candidate ratings were published, having dropped to 94% just a few days ago.

Simultaneously, the US dollar is retreating. EUR/USD bulls weren't deterred even by the unexpected slowdown in the Eurozone's composite PMI for July, which fell to 50.1, the lowest since February. Germany and France were the main culprits, with business activity falling below the critical 50 mark, indicating potential economic contraction.

Dynamics of European Business Activity

This shouldn't come as a surprise. The political crisis in France hasn't fully subsided, and Donald Trump's potential victory in the November elections increases the likelihood of a 60% tariff on imports from China. This would slow down China's GDP and the export-oriented Eurozone. A trade war would be especially painful for Germany, which accounts for half of the EU's exports to the largest Asian economy.

However, with Kamala Harris joining the presidential race, a Republican victory no longer seems guaranteed. The fight for the White House is ahead, and investors need to adjust their Trump-trading strategies accordingly.

Technically, a pin bar might be forming on the daily EUR/USD chart. If this happens, it could signal an opportunity to add long positions from the 1.083 level on a breakout above the bar's high near 1.086. There are chances for an upward trend resumption, but consolidation of the pair seems the most likely scenario.