EUR/USD Forecast: Still looking bullish after the small correction

The EUR/USD is trading around 1.1600, slightly lower on the day. Movements are limited as the UK enjoys a bank holiday and liquidity is more depressed.

The US Dollar is recovering after dropping on Friday. Fed Chair Jerome Powell was relatively dovish in his speech at Jackson Hole. He signaled further gradual hikes but conditioned them on ongoing growth in GDP and jobs. Also, he does not see inflation as accelerating or the economy overheating.

While a September hike is a done deal, and December is quite probable, further moves are now in doubt. His words weighed on the greenback.

Turkey is back to full swing after a weeklong holiday. The Turkish Lira resumed its falls, and this slightly weighs on the global mood. The USD/TRY remains far from the 7.00 level seen at the peak of the crisis.

Markets remain concerned about the next moves of the US in its trade spat with China. Talks ended inconclusively last week, and the Administration is set to impose new duties next week. 

The German IFO Business Climate beat expectations with 103.6 points. The trade truce is cited as one of the reasons for the improvement in business confidence in the continent's largest economy. EU Commission President Jean-Claude Juncker and US President Donald Trump met in late July and agreed to put new tariffs on hold.

Italy said it would veto the EU Budget if its worries about migration are not addressed. Many believe a compromise will be reached.

The calendar is void of top-tier indicators today, but US GDP and euro-zone inflation stand out later in the week,

EUR/USD Technical Analysis

The EUR/USD is trading within uptrend support and uptrend resistance that are not parallel. So far, the pattern holds. The pair broke above the 200 Simple Moving Average on the four-hour chart. Momentum is slightly positive, and the Relative Strength Index is out of overbought territory. All in all, this is a bullish bias.

1.1625 held the pair down last week. Further up, 1.1655 was the high point last week. 1.1720 and 1.1750 are the next levels to watch.

1.1595 was a low point earlier in the day and capped the EUR/USD in the past. More significant support is at 1.1530, where the latest rally began. 1.1490 was a swing low last week.

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