EUR/USD Forecast: Advancing in the steep uptrend channel as optimism prevails

The EUR/USD is trading above 1.1712, in the upper part of the recent range. The European Union's Chief Negotiator Michel Barnier said they would offer the UK a "deal unlike any other country" in a speech on Wednesday. His words sparked a rally in the Pound which also positively affected the Euro.

The currency bloc will also enjoy a better deal with the UK. Also, the risk-on atmosphere weighs on the US Dollar. The greenback was already on the back foot following the optimism about a trilateral NAFTA deal. After Mexico and the US struck an accord on Monday, negotiations between the US and Canada are making headway according to the latest reports.

The elephant in the room remains China. The US remains intent on imposing tariffs on $200 billion worth of Chinese products next week in a move that could be disruptive for the global economy. Vulnerable emerging market currencies such as the Argentinian Peso and the Turkish Lira are reeling, but the Euro seems untouched so far.

US Q2 GDP was upgraded to 4.2% annualized on Wednesday, beating expectations. However, yet another housing indicator, Pending Home Sales, fell below expectations. The US releases the Core PCE Price Index today, the Fed's favorite inflation figure. An acceleration to 2% YoY is on the cards. 

See: US PCE inflation preview: don't expect too much action here

The primary economic indicator of the day in the euro-zone is the preliminary inflation report from Germany for August. Germany's states publish their figures throughout the morning, and the all-German measure is due at 12:00 GMT. Spain reported an annualized Consumer Price Index of 2.2%, as expected. 

All in all, the focus remains on trade relations and also politics.

EUR/USD Technical Analysis

The EUR/USD is trading within a somewhat choppy uptrend channel in the past few days, as marked by the thick black lines on the chart. Additional bullish signs include an upbeat Relative Strength Index on the four-hour graph, which shies away from overbought conditions. Momentum remains positive, and the 50 Simple Moving Average crossed the 200 one.

All in all, the bulls seem to be in control.

1.1735 was the high point on Wednesday and may serve as an initial hurdle. More robust resistance awaits at 1.1750, a quadruple top from July. 1.1795 capped the pair in July and 1.1850 was the swing high on June 14th. 

Immediate support awaits at the current daily lows of 1.1685. 1.1655 was a low point earlier in the week, and 1.1625 capped the pair in mid-August. Further down, 1.1595 and 1.1530 are notable. 

More: Trade wars: $200 billion is serious, 3 scenarios and currency reactions for the upcoming escalation