EUR/USD Forecast: Looking to break free of the wedge on Independence Day

The EUR/USD is not going anywhere fast on America's Independence Day.
Trade war concerns are relatively muted and EZ PMI's were mixed.
The pair is trading in a narrowing wedge.

Yohay Elam FXStreet

The EUR/USD is trading in the mid 1.1600s, not very different from levels seen in previous days. After Germany's political crisis has ended, the focus returned to trade wars. China blocked the activities of Micron, an American company, in what could be seen as a low-level hit back at the US. On the other hand, the Chinese Yuan's fall has stabilized, a sign that the world's second-largest economy does not seek to escalate the confrontation.

Markets have been relatively calm and this allowed the pair to stabilize. Another stabilizing factor is the American Independence Day. US markets closed early on July 3rd and are fully closed on July 4th. Lower liquidity means that if we do get a significant development, volatility could be elevated.

However, the big moves will likely wait for Thursday's top-tier US releases. The ADP Non-Farm Payrolls and the ISM Non-Manufacturing PMI serve as hints towards the jobs report on Friday. In addition, the FOMC Meeting Minutes may reveal the members' thoughts on the trade and other topics.

See: ADP + ISM Non-Manufacturing PMI Preview: last minute hints could raise expectations for Friday's NFP

In the meantime, euro-zone final Services PMI's came slightly above expectations on average, with the euro-zone final measure being upgraded from 55 to 55.2 points, mostly driven by Germany.

EUR/USD Technical Analysis

The lower thick black line shows that the EUR/USD is experiencing higher lows which amount to uptrend support. The second line shows that the pair is capped by downtrend resistance, which began beforehand.

The textbook says that when the pair chooses a direction, the move will be quite substantial. Where will it go? Other indicators are neutral. The Relative Strength Index is around 50 and Momentum is nowhere to be seen. The pair also trades between the 50 and 200 Simple Moving Averages on this four-hour chart.

Support awaits at 1.1615 which held the pair from falling on June 29th. The next support line is 1.1590, a low point back on July 2nd. Further below, 1.1540 is the last cushion before 1.1508, the low point in 2018.

On the topside, 1.1695 capped the pair on July 2nd. More significant resistance is at 1.1720, the peak on June 26th. Far above, the June 14th swing high of 1.1850 looms.

More: Trade War from the Trenches: everything you need to know about the 3 big battles ahead

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.

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold looks vacillating above $4,150

Gold alternates gains with losses below the key $4,200 mark per troy ounce on Friday. The yellow metal’s irresolute price action comes in response to a modest pullback in the US Dollar and a tepid recovery in US Treasury yields across the board.

Bitcoin steadies at $82,000: The five forces crushing the Uptober rally

Crypto markets have remained under pressure so far in October, with Bitcoin (BTC) sliding below $80,000 earlier this week before recovering to around $82,000 on Friday, as macroeconomic headwinds and cooling demand weigh on the market.

The Fed just got a second hot inflation number. Here's what the diesel signal is really saying

The Federal Reserve (Fed) faces a renewed inflation challenge after two consecutive reports showed price pressure intensifying across the US economy. September's Consumer Price Index (CPI) confirmed accelerating consumer inflation, while the Producer Price Index (PPI) revealed an even sharper rise in business costs. Behind both reports lies a common factor: energy prices.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.