EUR/USD Forecast: Bears still have a chance to strike after Iran's attack is taken with a stride

EUR/USD is leaning lower amid rising Mid-East tensions.
Weak German figures and upbeat US ones may weigh on the pair.
Wednesday's chart is pointing to a bearish breakout of the wedge.

Yohay Elam FXStreet

"All is well" – the tweet by President Donald Trump has been able to calm markets after Iran fired missiles at two American bases in Iraq. The initial risk-off reaction has been followed by a return to normality. EUR/USD has pared its initial losses.

Tehran has claimed that 80 lives were lost but also added that it is not interested in outright war. The Pentagon has yet to report about any casualties in Iran's response to Friday's killing of Qassem Suleimani, a top Iranian general.

It seems that both sides are disinterested in further escalation – President Donald Trump faces the Presidential elections and Iran's economy is in a perilous state. However, any miscalculation may trigger a quick deterioration.

In an apparently unrelated incident, a Ukranian civil plane crashed after taking off from Tehran's airport, and the lives of 180 passengers are feared. Despite reports of a technical failure, the news adds to tensions.

Outside the Middle East

While euro/dollar has taken Iran's strike with a stride, it has other reasons to fall. Germany reported a drop of 1.3% in Factory Orders in November, far worse than expected. The manufacturing slump may drag the whole economy down.

In the US, the ISM Non-Manufacturing PMI for December beat expectations with 55 points, reflecting robust consumption. Later in the day, the ADP private-sector jobs report is forecast to show an increase of 160,000 positions in December, a jump from 67,000 in November. The publication serves as a hint toward the Non-Farm Payrolls.

See US ADP Preview: Labor market expansion is steady

EUR/USD Technical Analysis

Euro/dollar is trading in a narrowing wedge, or triangle, and has already tested the downside. If it breaks below uptrend support, it may accelerate its losses.

The currency pair is trading below the 50 Simple Moving Average on the four-hour chart ad battling the 100 SMA. Downside momentum persists but is minimal.

Overall, the bears are in the lead.

Support awaits at 1.1135, which was Tuesday's low point. It is closely followed by 1.1125, 2020 trough, and then by 1.1105, which worked in both directions in late December. 1.1065 is the next level to watch.

Resistance awaits at 1.1170, the recent swing high, and then by 1.1210, which capped it earlier this week. The late December highs of 1.1230 and 1.1240 are next.

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.

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold looks vacillating above $4,150

Gold alternates gains with losses below the key $4,200 mark per troy ounce on Friday. The yellow metal’s irresolute price action comes in response to a modest pullback in the US Dollar and a tepid recovery in US Treasury yields across the board.

Bitcoin steadies at $82,000: The five forces crushing the Uptober rally

Crypto markets have remained under pressure so far in October, with Bitcoin (BTC) sliding below $80,000 earlier this week before recovering to around $82,000 on Friday, as macroeconomic headwinds and cooling demand weigh on the market.

The Fed just got a second hot inflation number. Here's what the diesel signal is really saying

The Federal Reserve (Fed) faces a renewed inflation challenge after two consecutive reports showed price pressure intensifying across the US economy. September's Consumer Price Index (CPI) confirmed accelerating consumer inflation, while the Producer Price Index (PPI) revealed an even sharper rise in business costs. Behind both reports lies a common factor: energy prices.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.