EUR/USD violates key trendline on fading trade tensions and Brexit optimism

EUR/USD is better bid on reports stating the US could announce China trade deal on Friday and due to Brexit optimism.

The currency pair is currently trading at 1.1178, representing a 0.45% gain on the day, having hit a high of 1.12 in the Asian session. That level was last seen on Aug. 13.

The daily chart shows the trendline connecting September 2018 and June 2019 highs has been convincingly breached.

Tracking GBP higher

The Euro picked up a strong bid in Asia with Pound jumping to a 19-month high of 1.3515 on exit polls forecasting a landslide victory for Prime Minister Boris Johnson's Conservatives.

A decisive victory for Johnson is seen paving the way for Johnson to take Britain out of the European Union (EU) on Jan. 31. The resulting drop in the uncertainty could bode well for the UK economy.

As per the latest reports, the Conservatives have won 191 seats of 365 seats declared, while the Labour party has won just 131 seats.

With Johnson in lead, both Pound and Euro may remain better bid in Europe. The Prime Minister needs to win at least 326 seats out 650 to win a majority.            

US to announce the trade deal

President Trump may announce the US-China trade deal in Washington on Friday, sources told Bloomberg.

The fading trade tensions is good news for the EUR. After all, the 18-month trade war between the world's two biggest economies has pushed Germany, the Eurozone's largest economy, on the brink of recession.

The trade deal may also ease pressure on the European Central Bank to do more. The central bank kept rates unchanged on Thursday, having delivered a 10 basis point rate cut in September. The rates currently stand at -0.50%.

All in all, the path of least resistance for the EUR looks to be on the higher side. Even so, a minor pullback could be seen if the GBP sees a "sell the fact" pull back on official confirmation of Johnson's victory. 

Technical levels