EUR/USD Forecast: Missing its chance to rise on dollar weakness opens door to the downside

• EUR/USD has struggled amid growing EU-US trade tensions.
• Upbeat markets await US consumer confidence for the next signal.
• Friday's four-hour chart is showing a loss of upside momentum.

Calling Trump "obsessed" is probably not a winning strategy – at least not for the euro. The common currency is unable to benefit from the dollar's weakness.

Phil Hogan, the European Commissioner for Trade, told a conference in Washington that President Donald Trump is obsessed with America's trade deficit with the old continent. Moreover, he criticized the Sino-American trade deal that includes Chinese commitments to buying US goods – a potential violation of international commerce rules. Hogan is in the American capital to discuss Trump's threat to slap tariffs on French goods following France's "tech tax," which is imposed mostly on US companies.

These trade tensions have contributed to paring EUR/USD gains, triggered by several positive developments. The European Central Bank's meeting minutes were cautiously optimistic on Thursday. The bank sees indications that core inflation is rising and that the manufacturing slump is contained. 

Euro/dollar has also struggled to recover from upbeat US Retail Sales which beat expectations on all accounts – including an increase of 0.5% in the all-important Control Group. Yet while other currencies recovered against the greenback, the common currency stayed behind.

The University of Michigan publishes its preliminary read of Consumer Sentiment for January late on Friday. Economists expect ongoing optimism in consumption – the driver of the US economy. 

See US Michigan Consumer Sentiment Preview: No change is good

China reported annualized Gross Domestic Product growth of 6% in the fourth quarter, as expected. While this marks a slowdown, investors were encouraged by the yearly jump of 6.9% in industrial output in December and fro other indications of robust economic growth in the world's second-largest economy.

Alongside the trade deal with the US, the prospects for China and the rest of the world look promising. Stock markets are cheering and the safe-haven US dollar and Japanese yen have come under selling pressure. Yet as mentioned earlier, the euro is unable to benefit from the dollar's descent. 

Will the EUR/USD remain under pressure? Trade tensions and consumer data will likely move the pair.

One thing that is unlikely to move markets is Trump's impeachment trial. While the political drama may be of interest, the president will surely be acquited as Republican Senators are unlikely to vote against him.

EUR/USD Technical Analysis

Euro/dollar has lost upside momentum on the four-hour chart. It has also dropped below the 100 Simple Moving Average and is struggling to hold onto the 50 and 200 SMAs. 

Nevertheless, the currency pair is still trading above uptrend support. A break below this line may open the door to further falls.

Support awaits at 1.1125, which is the daily low, followed by 1.1105, a swing low from earlier this week. It is followed by 1.1085, the 2020 trough, and then by 1.1065 and 1.1040.

Strong resistance awaits at 1.1145, which has separated ranges of late. Next, this week's highs of 1.1165 and 1.1175 are the next levels to watch. Further above, 1.1205, 1.1230, and 1.1240 are eyed.