EUR/USD Forecast: Balanced before Trump's next trade tweet

EUR/USD is trading around 1.1200, sticking to familiar ranges.
Concerns about US-Sino trade talks outweigh upbeat German data.
The technical picture is fairly balanced for the currency pair.

Yohay Elam FXStreet

Will the US impose new tariffs on China? This answer to this question is critical to the next moves in EUR/USD. And a lot depends on tweets from the White House. The crisis in the talks between the world's largest economies weighs on stock markets but the world's most popular currency pair is waiting for more news to react.

China will send a high-level delegation to the US on Thursday in a new round of talks, the first official encounter since President Donald Trump blamed China for backtracking on previous commitments on trade. The Administration is preparing to slap a fresh set of tariffs as early as Friday in order to exert more pressure.

The Federal Reserve does not seem worried. Fed Vice Chair Richard Clarida stuck to the script by reiterating that there is no rush to cut interest rates and that the US economy "is in a good place." Fed Governor Lael Brainard will speak later in the day.

While global shares are falling and the safe-haven yen is rising, the euro holds its ground. The common currency partially enjoys the good news from Germany earlier today. The continent's locomotive reported an expansion of 0.5% in its industrial output in March, better than had been expected. The good news provides some calm after the EU slashed its growth forecasts on Tuesday.

Later today, the European Central Bank will publish its meeting minutes from the latest rate decision, which leaned to the dovish side. Also, President Mario Draghi will speak at an event in Frankfurt, but new comments on monetary policy seem unlikely.

Overall, the main driver today will likely be developments in trade talks which drive sentiment.

EUR/USD Technical Analysis

EUR/USD enjoys a marginally positive Momentum on the four-hour chart and the Relative Strength Index is a tad above 50. The currency pair is trading above the 50 Simple Moving Average, battling the 200 one, and looking up to the 100 SMA. All in all, the picture is a bit bullish, but nothing to get excited about.

1.1220 was a high point earlier this week and serves as the immediate resistance line. The early May swing high of 1.1265 is next and is closely followed by 1.1280 which provided support back in mid-April.

Support awaits at 1.1165 that was a low point earlier this week. It is followed by the swing low of 1.1135 and then by 1.1110, the lowest level that was seen this year.

More: EUR/USD has solid support but it may hesitate on the way up – Confluence Detector

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

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