EUR/USD Forecast: Ignoring Trump's manipulation claims as bears remain in control

EUR/UD has been settling below 1.1300 after Trump accused Europe and China of currency manipulation.
The US holiday is traditionally a time of slow trading but speculation on monetary policy may still affect prices
Past experience suggests today's US holiday will likely result in low volatility yet traders' speculation on monetary policy may still trigger some price action.
Thursday's four-hour chart implies EUR/USD has room to the downside.

Yohay Elam FXStreet

Will the US Treasury intervene to weaken the US dollar? That is what some analysts are speculating after US President Donald Trump complained about China and Europe manipulating their currencies – gaining an unfair advantage – and tweeted "We should match."

At the moment, currencies ignore his words. EUR/USD is trading below 1.1300 in a narrow range – as bond yields on sides of the Atlantic continue falling in tandem. The coordinated fall limits movements in EUR/USD. US 10-year Treasury yields have settled below 2% while German 10-year bund yields are close to -0.40% – the European Central Bank's deposit rate.

ECB officials will speak later today. Chief Economist Phillip Lane and Vice President Luis de Guindos are on the docket today. Investors are digesting the nomination of Christine Lagarde, Managing Director of the International Monetary Fund, to lead the Frankfurt-based institution. Lagarde – which will likely be dovish – is not trained as an economist and may rely on Lane for advice – raising his influence.

Markets will also be gearing up to Friday's all-important US Non-Farm Payrolls report. Wednesday's economic release from the world's largest economy all fell below expectations. ADP Non-Farm Payrolls rose by only 102K in June, the ISM Non-Manufacturing PMI slipped to 55.1 points, and factory orders dropped by 0.7% in May.

See US Non-Farm Payrolls Preview: Three is not the charm

On the trade front, the US and China have scheduled a telephone conversation for next week. The world's largest economies will resume trade talks – as agreed between presidents Donald Trump and Xi Jinping over the weekend. The topic is currently on the backburner.

EUR/USD Technical Analysis

EUR/USD is suffering from downside momentum on the four-hour chart, and the Relative Strength Index is leaning lower. The world's most-popular currency pair is trading below the 100 and 50 Simple Moving Averages.

Overall, bears remain in control.

Support awaits at 1.1270, which was the low point on Wednesday. It is followed by 1.1250, which capped EUR/USD in mid-June. Next, we find 1.1180, which was the low point in mid-June before the surge. 1.1145 and 1.1107 are next.

Initial resistance is at 1.1320, which was a stepping stone on the way up in mid-June. It is followed by 1.1350 that held the pair down in mid-June and served as support later last month. We find 1.1390 and 1.1410 next up.

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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