EUR/USD Forecast: Supported by the double-bottom amid trade hopes

EUR/USD is trading above 1.1300, stable on the day but at the bottom of the recent range. Markets are more optimistic on Wednesday as China is reportedly set to buy US soybeans and lower car tariffs. Moreover, the release on bail of Huawei CFO Meng in Vancouver, Canada, also helps alleviate tensions.

In the old continent, the negotiations between Italy and the European Union reach a climax as Italian PM Giuseppe Conte meets European Commission President Jean-Claude Juncker. Both sides are striving to agree on Italy's budget for 2019, and especially on the deficit. A figure of around 2% is reported, but details are yet to be sorted out.

France, the second-largest economy, may also find itself at loggerheads with the EC over the budget. President Emmanuel Macron is responding to the widespread protest of the "Gilets Jaunes" movement and aims to increase fiscal spending. 

In Germany, the ZEW survey showed improving future expectations but deteriorating economic conditions at the present. The strength of the European economy will be in the limelight at the all-important European Central Bank meeting on Thursday. 

See: ECB Preview: The end of the asset purchasing at the time of uncertainty may reposition Euro higher

Brexit continues having an influence on the Euro. UK PM Theresa May faces a leadership challenge later in the day amid growing frustration around Brexit. There is some speculation that Article 50 will be delayed if she loses. 

The primary economic indicator today is the US inflation report for November. Headline Consumer Price Index is projected to rise by 2.2% YoY. More importantly, Core CPI carries expectations of the same figure, which would be an acceleration from the disappointing 2.1% level that was reported in October. The data is closely watched by the Fed, which makes its rate decision next week.

See: US CPI Preview: Inflation to decline, core rate stable

EUR/USD Technical Analysis

The world's most popular currency pair lost the uptrend channel that accompanied it in the last couple of weeks. Another bearish sign is downside Momentum on the four-hour chart. Moreover, the 50 Simple Moving Average failed to break above the 200 one.

Significant support awaits at 1.1305, a level that was hit in late November and also this week, thus making it a double-bottom. Further support awaits at 1.1270 recorded in late November. The last line to watch is 1.1215 which is the lowest level in 2018.

On the upside, we find 1.1350 which supported the pair on Tuesday and also had a similar role in late November. Further up, 1.1380 capped EUR/USD in early December. 1.1405 was a high point on Tuesday and it is followed by 1.1420 and 1.1445.