EUR/USD Forecast: Heading North on North Korea denuclearization hopes, breaks stubborn resistance
|- North Korea is ready to consider denuclearization in return for safeguarding its regime.
- The breaking news triggered a risk mode atmosphere, sending the EUR/USD to $1.2400.
- The pair is now trending higher once again after recapturing the uptrend resistance line.
The talks between North Korea and South Korea yielded a major breakthrough. North Korea, led by Kum Jong-un, is ready to consider abandoning its nuclear weapons. This follows a long period of testing atomic bombs and ballistic missiles. In return, the regime wants safeguards for its existence.
In addition, the two neighbors agreed to hold a summit between their leaders on the border in April. North Korea has also promised to suspend provocations as talks continue and also South Korean drills with the US were discussed. South Korean President Moon Jae-in has sought peace with the North since taking office.
The detente that began around the Winter Olympics is seeing progress. A response from the US, South Korea's ally and protector, will come shortly.
Markets reacted immediately with a risk-on atmosphere. The safe-haven yen and also the US Dollar are being sold off and other currencies are on a rise. The EUR/USD, which was already well-poised to take advantage of good news, jumped to higher ground. Earlier, the common currency ignored uncertainty in Italy, the worries about a trade war, and also the upcoming ECB decision (preview here).
EUR/USD Technical picture turns bullish
The pair broke above the $1.2360 level that capped it in recent days and also in late February. Moreover, the battle over the uptrend resistance line has been won. The pair traded alongside this level, made a break to the downside and then tried to recapture it for quite a few days. It now seems that the move is complete.
In addition, the RSI is now moving up and leaving the 50 point behind it.
Further resistance awaits at $1.2450 which supported the pair when it traded on higher ground and $1.2555, the 3-year high.
$1.2360 turns into support, followed by $1.2270, the post-Italian elections low, and $1.2205, the mid-February low.
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