EUR/USD Forecast: Perfect wedge implies an explosive move ahead

The EUR/USD is sticking to its range, not going anywhere fast.
The narrowing wedge will force the pair to take a decision quite soon.
Tension is mounting towards US GDP and the ECB's decision.

Yohay Elam FXStreet

The EUR/USD trading in a relatively narrow range just under 1.1700, consolidating its losses from yesterday. The US Dollar advanced on Monday amid leaks from the White House. US President Donald Trump and his aides told Fox News that Q2 growth is expected to be close to 5% annualized. Market expectations which stood at 4.2% are now at 4.8%.

A more robust growth rate implies a faster pace of rate rises by the Federal Reserve and a stronger US Dollar. The first release of Q2 GDP is released on Friday at 12:30. The initial publication always draws more attention than the next ones and following the leak, anticipation is even greater.

The second significant event of the week is the rate decision by the European Central Bank. ECB President Mario Draghi and his colleagues are not expected to change any of their policy measures at this point but may respond to the diverging inflation measures, trade fears, and other recent developments.

See: ECB Preview: All quiet on the monetary policy front until 2019

In the euro-zone, Markit's preliminary Purchasing Managers' Indices came out above expectations overall. Frech Manufacturing PMI beat with 53.1 while Services slightly missed with 55.3 More importantly, Germany's Manufacturing PMI is on the rise after several months of declines, standing at 57.3. Also here, the Services PMI did not impress with 54.4.

The PMI's are forward-looking surveys that provide guidance for the future. The robust manufacturing data implies that French and German manufacturers do not fear tariffs, at least for now.

Later today, Markit publishes its preliminary PMI data for the US. No big changes are expected there.

EUR/USD Technical Analysis

The EUR/USD is trading in a narrowing triangle or wedge. Downtrend resistance has its roots back in mid-June and has since touched the price twice. Uptrend support dates back to late June and also touched the price two additional times. The pair is closer to uptrend resistance but basically in the middle of the range.

Where will it go to?

The Relative Strength Index is stable around 50. However, Momentum has picked up to the upside and the pair trades above the 50 and 200 Simple Moving Averages on the four-hour chart, both bullish signs.

Looking up, 1.1750 capped the pair on Monday and is the initial hurdle. 1.1795 was a high point in mid-July and 1.1850 was a swing high back on June 14th. All three lines form the downtrend resistance line.

On the downside, we find 1.1675 was an immediate line of support after holding the pair down last week. 1.1575 was a swing low last week and forms part of uptrend support. 1.1508 is 2018 low and where the uptrend support line begins.

More: Trade War from the Trenches: the dogs bark but the caravan moves on (for now)

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.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.