EUR/USD Forecast: Extended uptrend as Brexit bites the bears
|- EUR/USD is consolidating its gains below 1.1300.
- Brexit has a growing impact and the focus may shift to US data later.
- The technical picture has significantly improved for the pair.
EUR/USD is ticking higher, carried along higher with the pound. The UK Parliament delivered a second consecutive defeat to the government by rejecting the amended accord. It had become clear that there was no majority after AG Geoffrey Cox said the risk of remaining in the Customs Union remained unchanged. The pound and also the euro managed to recover afterward.
Moreover, the rejection now paces the road to delaying Brexit. Parliament will likely reject a no-deal Brexit today and will probably instruct the government to seek an extension on Thursday. Delaying Brexit leaves the door open to having no Brexit at all.
This hope not only boosts the pound but also the euro. The euro-zone also has a lot to lose from a hard Brexit. In addition, Brexit has become a global issue impacting the broader risk sentiment in markets.
While the vote is due only at 19:00, political developments around the topic will likely move the pound and, to a lesser extent, the euro throughout the day.
Back to the old continent, the Italian member of the European Central Bank Ignazio Angeloni criticized his government for the current crisis. The unemployment rate in the currency bloc's third-largest economy rose to 10.6%. Euro-zone industrial output is set to rise in January after a drop of 0.9% in December.
The primary economic indicator due today is US Durable Goods Orders, which reflects investment and feeds into GDP data. The figures are for January, delayed due to the government shutdown.
See: US Durable Goods Preview: Business spending to rise
EUR/USD Technical Analysis
EUR/USD continues its recovery and Momentum on the four-hour chart has finally turned positive. In addition, the pair is topping the 50 Simple Moving Average, another bullish sign.
Resistance awaits at 1.1310 which was the peak on Tuesday and also a swing low in early March. 1.1325 capped the pair last week and 1.1350 is where the 200 SMA meets the chart. 1.1410 and 1.1420 are next.
Support is at 1.1275 which was the daily low and also a swing low in mid-February. 1.1250 was a separator of range in recent days. It is followed by 1.1230 was a swing low in February and 1.1220 was a low point early in the week.
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