EUR/USD Forecast: Failure to break resistance does not bode well

The EUR/USD continues trading around 1.1600, sticking to well-known ranges. The pair enjoyed an upbeat market mood on Tuesday until a report that China asked WTO authorization to slap trade sanctions on the US strengthened the US Dollar. So far, the US did not announce the implementation of the new tariffs on China, on $200 billion worth of Chinese goods. 

There were conflicting headlines about Brexit. The European Union reportedly wants to cool expectations for a quick deal. On the other hand, Irish Prime Minister Leo Varadkar said a deal is possible within weeks. The Pound jumped down and up and the Euro felt part of the movement.

Data-wise, the German ZEW Economic Sentiment came out slightly better than expected but remained in negative territory, indicating ongoing pessimism. In the data, the JOLTs job openings report was robust, showing a cycle high level of openings and quits. A higher level of people quitting their positions indicates confidence and potentially higher wages. 

The calendar is relatively light today with euro-zone Industrial Production and the US Producer Price Index due later on. Late in the evening, FOMC voting member Lael Brainard will speak in Detroit. The Fed is set to raise rates in two weeks, so her speech is unlikely to rock the boat.

Markets are already gearing up to Thursday's big events. The European Central Bank is expected to leave its policy unchanged and may express concern on both inflation and trade. The US publishes the Consumer Price Index (CPI) which may impact the future moves of the Fed and the US Dollar. 

See:

• ECB Preview: Dovish Draghi set to dampen tiny tightening, EUR/USD bears are waiting
• US inflation preview: Expect a straightforward USD reaction, Fed may find its limits

EUR/USD Technical Analysis

The EUR/USD made an attempt to break above the downtrend resistance line that accompanies the pair since late August. This is a bearish sign. Momentum is negative and the Relative Strength Index is leaning lower.

Support awaits at 1.1560, which was the low yesterday and coincides with the 200 Simple Moving Average. Further down we see 1.1530, a critical triple bottom. 1.1495 and 1.1445 are next. Both worked as support before the pair recovered to the current range.

1.1605 provided some support in early September. It is followed by 1.1660 which is the high point of September so far. 1.1695 is next after serving as resistance in late August. The 1.1735 and the quadruple top of 1.1750 are next up.

All in all, the picture is quite balanced, but the false break to the upside is a bearish sign.

More: EUR/USD locked in a range and a break could be explosive – Confluence Detector