EUR/USD: Descending broadening wedge on 4H, focus on yield differentials

The EUR/USD pair has charted a descending broadening wedge on the 4-hour chart, which is widely considered a bullish reversal pattern.
An upside break could be seen today if the spread between the 10-year Italian bond yield and the German bond yields drops sharply.

Omkar Godbole FXStreet Contributor

The EUR/USD has created a descending broadening wedge on the 4-hour chart. At press time, the common currency is trading at 1.16 - below the 50-day moving average (MA) of 1.1613.

An upside break of the descending broadening wedge resistance (top end), currently seen at 1.1638, would confirm a bullish reversal, that is, a pullback from the recent high of 1.1733 has ended and the pair could make climb its way back to levels above 1.17.

A bullish breakout could be in the offing if the Italy-Germany 10-year yield drops sharply, signaling the concerns regarding Italy's fiscal health are easing. As of writing, the spread stands at 285 basis points, having doubled since May.

On the other hand, if the spread continues to widen and the risk assets take a hit, then the EUR/USD could find acceptance below 1.1587 (4H 200MA) and drop towards the key support at 1.15.

EUR/USD Technical Levels

Resistance: 1.1613 (50-day moving average), 1.1632 (10-day moving average), 1.1690 (Aug. 31 high)

Support: 1.1568 (38.2% Fib R of 1.1301/1.1733), 1.1530 (June 8 low), 1.15 (psychological level)

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

AUD/USD consolidates above 0.7200 after hot Chinese CPI data

AUD/USD is extending its consolidative price action above 0.7200 during the Asian session on Wednesday, uninspired by hot Chinese CPI and PPI data. Meanwhile, rising RBA rate-hike bets act as a tailwind for the Aussie amid Yen-inspired US Dollar weakness. Traders await the release of US inflation figures later in the week for fresh impetus.

USD/JPY stays in red near 153.50 amid aggressive BoJ hike bets

USD/JPY keeps the bearish tone intact at around 153.50 during European trading hours on Wednesday. A strong Reuters Tankan business survey adds to the case for continued BoJ policy normalisation and supports the Japanese Yen. This, along with a broadly weaker US Dollar, keeps the pair close to a nearly seven-month low set on Tuesday.

Gold recovers further from one-week low, retakes $4.400 amid sustained USD selling

Gold builds on its intraday recovery from a one-week low and reclaims the $4,400 mark heading into the European session on Wednesday. The commodity, for now, seems to have snapped a three-day losing streak amid a weaker US Dollar, which remains depressed near its lowest level in over two weeks amid the Bank of Japan-inspired rally in the Japanese Yen.

Pi Network's rebound holds as momentum improves

Pi Network (PI) extends its recovery on Wednesday, trading above $0.098 after finding support around the 50-day Exponential Moving Average earlier this week. The rebound comes as the Pi Core Team highlights the importance of strengthening its developer ecosystem to expand application-level utility across the network.

Oil, Apple and JPY in focus

Oil prices are rising on Wednesday as tit-for-tat strikes between Iran and the US threaten oil supplies as the two sides battle for control of the Strait of Hormuz. Stock futures have switched their attention from a strong earnings season to the challenges ahead, including a 10-year Treasury yield that is hovering close to the 4.8% level.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.