EUR/USD Forecast: Falling out of the triangle? Trump's trade decisions are key


  • EUR/USD has been trading in a narrowing range amid dual trade tensions.
  • Speculation about the eurozone economy is set to move the pair.
  • Wednesday's four-hour chart is showing a narrowing wedge.

Will President Donald Trump hit the eurozone with new tariffs? That threat is looming over the old continent as Phil Hogan of the European Commission continues talking to his American counterparts in Washington. 

"Tariff Man" – as Trump called himself – is sending worrying signs for Europe on the Chinese front. The world's largest economies are set to sign Phase One of the trade deal later on Wednesday. While many details are still pending, the administration announced that no further reductions of levies are likely before November – when Presidential elections are due. 

Moreover, the US will likely tighten restrictions on Huawei – the Chinese telecom giant. The lack of further tariff removals and the developments around Huawei are both ominous signs for Europe and have both weighed on the market mood.

Back in the old continent, Germany's coalition partners are spurring about what to do with the fiscal surplus that the continent's powerhouse generated in 2019. Angela Merkel's CDU party wants to cut taxes while the center-left SPD desires more spending. 

The European Central Bank has repeated its calls on Germany and others to invest more and stimulate the eurozone economies. Growth has been meager in recent quarters. 

Mixed data

While the expansion is limited, one ECB member downplayed the chances of an outright downturn. Francois Villeroy de Galhau said that "we can practically rule out a US or EU recession" – in words that may come to haunt him. 

The economic calendar features euro-zone industrial output, which carries expectations for a recovery in November after falling in October. US producer prices are set to rise as well. America's headline Consumer Price Index rose to 2.3% and remained unchanged on the core in December, as expected. 

See US inflation reinforces the Fed neutral policy.

Overall, trade headlines are set to rock markets on Wednesday.

EUR/USD Technical Analysis

EUR USD technical analysis January 15 2020

Euro/dollar is trading within a narrowing triangle or wedge. The break below the uptrend support line was a false one – another attempt to move lower bounced exactly at that uptrend line. 

Will it break to the upside or the downside? EUR/USD is trading below the 50, 100, and 200 Simple Moving Averages on the four-hour chart. While momentum is to the upside, it is weak. 

Overall, bears have an advantage. 

The recent lows of 1.1105, 1.1085, and 1.1065 all provide support. The next levels to watch are 1.1040 and 1.0985.

Resistance awaits at 1.1145, which is also the confluence of the 100 SMA. Next, 1.1170, 1.1205, and 1.1230 all capped the currency pair of late and serve as resistance. 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD moving one step closer to 1.1000

The shared currency remains under pressure amid dismal local data and persistent demand for the greenback in a risk-averse environment. EUR/USD trading near a daily low of 1.1009.

EUR/USD News

GBP/USD trims early gains, trades in the red

The GBP/USD pair has retreated from its daily high of 1.3105 and now trades marginally lower daily basis near 1.3050, amid dollar’s strength, looming BOE and Brexit.

GBP/USD News

Crypto market: FOMO mode on, the late-comer's doubt

The crypto market opens the trading week by taking advantage of the momentum of the movement that started early Sunday morning. As if it were an established rhythm, this week it is time to go up after going down the previous one, and up again the previous one.

Read more

WTI bounces from 3-month lows near $52.00

There is no respite for the barrel of WTI on Monday, as prices of the American benchmark for the sweet light crude oil tumbled to the $52.00 region in early trade, area last visited in early October 2019.

Oil News

USD/JPY: Bears lead on the run to safety

Coronavirus getting stronger, infections to continue to rise. Risk-off Monday, an empty macroeconomic calendar exacerbates sentiment trading. USD/JPY to accelerate its decline on a break below 108.65, a critical Fibonacci support level.

USD/JPY News

Forex Majors

Cryptocurrencies

Signatures