EUR/USD Forecast: Lost in Chinese translation, close to breaking support

EUR/USD is trading closer to 1.1300, down on the day. After an upbeat market mood on Monday, things look different on Tuesday. US President Donald Trump said that further tariffs on China, on the remaining $267 billion worth of goods, will likely go through. 

And then, China said that Trump and Xi agreed to reach mutually beneficial agreements. The mood improved again, triggering a recovery in EUR/USD. However, this did not last for too long. China clarified that they were referring to the phone call between the presidents on November 1st and that there is now a "need" to reach an agreement. Bloomberg said there was a mistranslation. 

Stocks and risk currencies surrendered to the safe-haven US Dollar and Japanese yen. 

Back in the old continent, Italy continues showing signs of a compromise. Reports from the euro zone's third-largest economy suggest that the Citizens' Income program may be delayed and that the budget deficit may be lowered to 2.2% against 2.4% initially proposed. The European Commission wants 2.2% and more details. 

Brexit is also weighing on the pair as it seems unlikely that UK PM Theresa May can pass the Brexit deal in Parliament. 

In the US, Fed Vice Chair Richard Clarida will speak and may provide more details about the Fed's stance. His dovish comments on November 16th weighed on the greenback. 

EUR/USD Technical Analysis

EUR/USD trades alongside a downtrend support line. An initial dip below the line proved premature, but the level is still in danger. Momentum is to the downside and the pair trades below the 50 and 200 Simple Moving Averages. The Relative Strength Index (RSI) is lower but does not reflect oversold conditions. All in all, bears seem to be gaining control.

1.1300 is a critical line after it served as a double bottom. Further down, 1.1260 provided support when EUR/USD was recovering in mid-November. 1.1215 is the line in the and: the 2018 low. 

Looking up, 1.1325 provided support late last week and is the initial cap. 1.1355 worked as support in mid-November. It is followed by 1.1375 which was the high point this week.