EUR/USD Forecast: Breaking resistance on an improved market mood

The EUR/USD is moving up, enjoying a better market mood.
Progress in the US-EU negotiations and Brexit underpin the rise.
The technical picture is improving as the pair breaks downtrend resistance.

Yohay Elam FXStreet

The EUR/USD is trading above 1.1600, rising on the day. The market mood is more optimistic than earlier. The United States and the European Union have reportedly been making progress in the negotiations that started after the Trump-Juncker meeting in late July. Both sides aim to reach an accord in November.

The positive tones in the Brexit negotiations also support the Euro, which is carried away by the Pound. Chief EU Negotiator Michel Barnier said on Monday that reaching a deal is "realistic" within six to eight weeks. The EU may hold an extraordinary Summit on November 13th to discuss Brexit. This gathering is in addition to the event due on October 18th.

Another positive factor is the absence of news regarding the new US tariffs on China. The deadline for public commentary ended on Thursday, and an announcement on the implementation of the duties on $200 billion worth of Chinese goods seemed imminent. However, as time passes by without a formal statement, markets may think it is not coming.

The German ZEW Economic Sentiment is expected to show slight improvement but to remain in negative territory once again, reflecting a bit of pessimism in the continent's largest economy. In the US, the JOLTs job openings report may be of interest to the Fed. The report showed an annualized level of 6.66 million in June.

More significant events await markets on Thursday. The European Central Bank is expected to refrain from announcing new measures on the eve of tapering QE. The US releases inflation data for August.

See:

EUR/USD Technical Analysis

The EUR/USD is breaking the downtrend resistance line that stretches from mid-August and has accompanied the pair also in recent days. The move is yet to be confirmed. The Relative Strength Index is pointing to higher ground while Momentum is flat. The EUR/USD broke above the 50 Simple Moving Average on the four-hour chart.

1.1660 capped the pair last week and served as immediate resistance. Further up, 1.1695 held the EUR/USD down in late August and also beforehand. 1.1735 was the high point in mid-August, and 1.1750 was a quadruple top in July.

1.1604 served as a support line last week. The low point of 1.1575 seen earlier in the day is also of importance. The most significant line to the downside is 1.1530; a triple-bottom touched in recent weeks.

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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