The euro has been treading water Tuesday, with the price reluctant to push above 1.2135. Thus, there has been no rewarding trading chance for day traders in the EUR/USD.
Is it now time for a breakout in the EUR/USD?
Maybe – at least for a small technical breakout ahead of tomorrow’s ECB rate decision. Prices narrowed formatting a symmetrical triangle this morning which predicts upcoming price breakouts to either side. A renewed rise above 1.2130 could encourage bulls to buy euros towards the 1.2140-50 area where we see a next hurdle. If the euro is able to take out the 1.2150-barrier and climbs above 1.2165 we may see a run for 1.2230. On the downside we will keep an eye on a sustained break below 1.21 which could send the euro lower towards 1.2050. A break below 1.2030 could result in a test of 1.20.
Today, U.K. Prime Minister Boris Johnson travels to Brussels for dinner with EU Commission President Ursula von der Leyen as both sides seek to save Brexit trade negotiations. Until we know more in the next couple of days, the Brexit saga continues. But bear in mind, that if there is no agreement the pound could fall much more than its 1.6% plunge on Monday. With a deal we could see sterling racing towards 1.3650 and maybe even higher, depending on what is already priced in into the pound’s uptrend.
Looking at the technical picture we see the cable confined to a trading range between 1.34 and 1.33. In case of a renewed rise above 1.3410 it will be interesting whether bearish momentum starts to emerge if price touches the 1.3450-zone (red ellipse). On the downside, the 1.3285-level remains of interest, while a break below that level could invigorate fresh bearish momentum towards 1.32. However, a no-deal would wipe out all previous forecasts and analysis with lower targets which are not conceivable.
We wish you good trades!
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