EUR/USD Forecast: Breaking higher as the Brexit saga calms (for now)

• EUR/USD is trading at the upper end of this week's range.
• Some calm on Brexit, Italy, and trade allows a recovery.
• The technical picture is improving for the pair.

The EUR/USD is trading around 1.1360, slightly higher on the day. Brexit dominated the headlines in recent days and had an impact beyond Britain's shores. After the British government approved the draft withdrawal deal with the EU, a series of resignations hit the Pound hard. Most prominently, the departure of Brexit Secretary Dominic Raab weighed heavily not only on the Pound but also on the Euro. Also, members of UK PM Theresa May's party sent letters calling for a leadership challenge.

However, May proved she is a survivor and vowed to fight until the end. The Pound stabilized, and so did the Euro.

In the old continent, Italy remains a source of concern as the clash with the European Commission continues. Deputy PM Matteo Salvini was quoted as saying that a government run by his party would leave the euro-zone. The comments were later denied, but the spread between German and Italian ranges widened. Things are calmer now. The EC is projected to respond to Italy on November 21st and disciplinary action is one of the options.

Mario Draghi, the President of the European Central Bank, speaks in Frankfurt. Further signs of an economic slowdown have been seen of late, most prominently Germany's contraction in Q3. The President of the German Bundesbank Jens Weidmann will also talk. Final euro-zone inflation figures for October are projected to confirm the initial read: 2.2% on the headline and 1.1% on the core. 

Talks between the US and China continue ahead of the Trump-Xi meeting in Buenos Aires at the end of the month. Robert Lighthizer, the US Trade Representative, denied reports about not moving forward with further tariffs due at the end of the year. However, markets are calmer on prospects of progress. 

In the US, Retail Sales missed expectations with 0.3% on the headline and 0.3% on the Retail Sales Control Group. Nevertheless, the ongoing growth is unlikely to move the Fed from its plans to raise rates in December. Today, US industrial production is of interest. 

EUR/USD Technical Analysis

The EUR/USD is trading just above the 50 Simple Moving Average on the four-hour chart. This trend line is also below the 1.1350 line which was a swing low in early November. The pair is currently at the highest levels of the week. Another bullish sign is Momentum, which is clearly to the upside. The Relative Strength Index (RSI) is ticking up but far from the 70 level which indicates overbought conditions. 

Above 1.1350, the next line to watch is 1.1400 which provided support to the pair when it traded on the higher ground last week. 1.1460 capped the pair in early November, and 1.1500 held EUR/USD down around the US Mid-Term Elections.

Looking down, 1.1300 remains of high importance after it worked as a double bottom. 1.1260 provided support earlier this week, and the 17-month low of 1.1215 awaits below.