EUR/USD Forecast: 3 reasons to be hopeful for a break above resistance

EUR/USD is trading in the lower half of the 1.1300 handle, stable after the storm. US stock markets crashed on concerns that the US and China did not reach a meaningful agreement came after President Donald Trump tweeted that he is a "tariff man" alongside hopes for a deal. Moreover, the Administration nominated Robert Lighthizer, a China hawk, to lead negotiations with the world's second-largest economy. 

New York Fed President John Williams did not help either. He was upbeat on the economy and did not share the concerns some of his colleagues had about the global and US economies.

The US Dollar strengthened on both his comments and the China talks. The risk-off atmosphere sent the pair down towards 1.131. 

Since then, there have been several positive developments that support further gains.

1) China's upbeat statement

After most of the comments about the Trump-Xi Summit came from Washington, Beijing chimed in. They said the encounter was successful, confirmed there would be 90 days for talks, and aligned some other declarations with those coming from the White House.

European stocks are already faring better than US ones, and S&P futures are positive. While US markets are closed today due to the funeral of former President George H. W. Bush, the rise of futures supports the pair.

In addition, there are reports that China is indeed taking steps to buy soya beans and other agricultural goods from the US, a trust-building move.

2) Italy climbdown continues

The euro zone's third-largest economy had already begun retreating from their tough stance last week and are ready to consider a lower budget deficit.

Brussels and Rome are now getting even closer as reports suggest that the Italian government may be ready to drop its plan for a Citizens' Income that is a key electoral pledge fo the 5-Star Movement. Such a move could accelerate negotiations for a deal between Italy and the European Commission.

3) Hopes for a softer Brexit (or even Remain)

Early on Tuesday, the European Court of Justice's Advocate General opined that the UK could revoke Article 50 unilaterally, thus reversing Brexit. 

More importantly, the UK Parliament gave itself the powers to decide on the next steps on Brexit in case they reject the withdrawal agreement between the UK and the EU. Contrary to the results of the EU Referendum, there is a pro-Remain majority in the House of Commons.

Will Parliament go against the will of the people? This is unclear, but there is a growing chance of avoiding the worst case scenario of a hard, no-deal Brexit. 

Brexit news also impacts the common currency.

All in all, fundamentals point to the upside

EUR/USD Technical Analysis - Not so great

EUR/USD is trading just below the 50 Simple Moving Average and also the 200 one. Moreover, Momentum is to the downside.

Support awaits at 1.1316, the fresh low. The round number and former double-bottom of 1.1300 is waiting close by. 1.1270 was the low point last week and 1.1215 is the current 2018 low.

1.1350 was a swing low last week and is very close. By breaking 1.1350, the pair will ahve also overcome the 50 SMA. 

Therefore, 1.1350 is a critical level and could unleash the upside.

Further up, 1.1380 was a swing high early in the week. The recent peak of 1.1420 seen on Tuesday is the next line to watch. It is followed by 1.1430, 1.1475, and 1.1500.