EUR/USD Forecast: Extending the gains with the trade talks extension

EUR/USD is trading in the mid 1.1300s, up on the day. The US has agreed to postpone the imposition of new tariffs on China, a move that was planned for March 1st had negotiations not concluded. While there are no final deals, both sides report progress and satisfaction.

China has agreed to maintain a stable yuan and to buy US goods, while structural topics such as intellectual property and the government's intervention in the economy have not seen progress. A meeting between Presidents Donald Trump and Xi Jinping is due in late March in Florida. 

The news sent Asian stocks higher and diminished demand for the safe-haven yen and USD, propping up EUR/USD.

Back on Friday, the picture was murkier for the euro. The German IFO Business Climate came out at 98.5 points, a fourth consecutive decline. German Finance Minister Olaf Scholz acknowledged the slowdown, but still sees an upwards trajectory. The flash PMI, published on Thursday, showed signs of bottoming out in the euro-zone economies.

A light calendar awaits traders today with US final wholesale inventories and a speech by Fed Vice Chair Richard Clarida. Clarida also spoke on Friday and failed to move markets.

Brexit remains an issue for broader markets. With 32 left to go, UK PM May is considering another delay to the vote in Parliament, from this week to March 12th, leaving little time for passing all the laws. However, there are reports of a potential delay by two, three, or even 21 months to the UK's departure. A cliff-edge Brexit will be a major disruption also to the euro-zone. At the moment, optimism prevails.

EUR/USD Technical Analysis

EUR/USD is trading above the 50 Simple Moving Average on the four-hour chart and but below the 200 one. Momentum is almost non-existent and the Relative Strength Index is balanced. All in all, the pair looks listless.

1.1360 serves as an initial cap, holding euro/dollar down earlier in the day and also last week. 1.1372 was the high point last week. It is followed by 1.1390 and 1.1405 that worked as support lines in late January.

1.1330 was a low point early in the day and provides weak support. 1.1315 was a trough on Friday and also converges with the 50 SMA. 1.1295 was a swing low last week and more significant support awaits at 1.1275 which was a swing low last week.

More: EUR/USD has room to push higher if it moves above this resistance line – Confluence Detector