EUR/USD Forecast: Ignoring Syria and rising, but can it break out of range?
|- The EUR/USD is trading higher on the day, yet moving within known ranges.
- The weekend airstrikes in Syria have been ignored by markets so far.
- The technical picture for the pair remains clear as mud.
The EUR/USD is trading above $1.2365, up some 0.20%. The US Dollar is losing some ground in the wake of the new week. The weekend was dominated by the news that the US, the UK, and France bombarded Syrian chemical installations. This came as a response to the Assad regime's gassing of its citizens in Douma on April 7th.
At first, US President Donald Trump talked about sustained action and Russia's President Vladimir Putin called it "an act of aggression." Yet as time passed by, the move will likely be one-off. Syria, Russia, and Iran are unlikely to retaliate and the West is not eager for another dive into the Middle Eastern quagmire.
All in all, the reaction in markets is quite muted.
Other forces are in play. The US President remains troubled by the Mueller Investigation and the seizure of critical documents from his lawyer Michael Cohen. Besides, the former Director of the FBI James Comey published an explosive book and gave a revealing interview that heavily criticized the President, calling him morally unfit for the job. The distractions of the Administration may be contributing to some USD weakness.
In the euro-zone, Germany's Wholesale Price Index disappointed with a flat read against 0.4% that had been expected, MoM. This did little to move the common currency. The big release of the day is yet to come: the US Retail Sales report is due at 12:30 and markets expected headline sales to rise by 0.4% MoM in March against a drop of 0.1% in February. The Retail Sales Control Group is also projected to show an increase.
EUR/USD Technical Analysis
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The pair is trading within a narrowing wedge and a narrow range in general. The recent rise brings it to the top of this wedge. The RSI is slightly positive, but Momentum is negative. The EUR/USD is slightly above the 50-day Simple Moving Average.
All in all, there are more positive than negative signs, but the picture is quite balanced.
Resistance awaits at $1.2395, the high seen last week. Further above, $1.2412, $1.2447 and $1.2480 have all been highs in the past six weeks.
On the downside, support is at the round number of $1.2300 which provided support to the pair last week. This is followed by the recent lows of $1.2240 in late March and $1.2210 in early April.
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