The EUR/USD currency pair extended weekly gains to the 1.1200 level on Friday in a period that has seen the pair drop to levels last witnessed in 2017 of 1.1107. The currency pair’s rebound comes following a series of US economic events that failed to impress traders.
Generally, the EUR/USD currency pair continues to trade on a downward trending channel although the recent movement might have triggered a bullish breakout from the bearish wedge.
EUR/USD Fundamentals Overview
From a fundamental perspective, the EUR/USD currency pair’s movement continues to rely on the US economic data and geopolitical developments regarding trade relations with China.
Based on recent data, the US Treasury Yields have continued to fall over the last few days as investors increase activity in risk-off trading.
On Thursday, the US 10-Year Treasury yield fell to the lowest level since 2017. Analysts attributed the fall to the uncertainty surrounding the US-China trade war.
The economic data released also failed to impress with the US durable goods falling short of expectations with -2.1%.
EUR/USD Technical Analysis (the 240-mi Chart)
Technically, the EUR/USD currency pair appears to be trading within a downward trending wedge, which supports a bearish bias.
However, the pair’s recent resurgence following the massive decline in the US yields could trigger a reversal. This will be interesting to both the bulls and the bears.
The bulls will target opportunities around 1.1222, just above the 200-period MA while the bears will look to pounce by targeting profits at 1.1148, which has been a key support zone.
EUR/USD Technical Analysis (the Daily Chart)
In the daily chart, the EUR/USD currency pair appears to be trading in a consolidative shape, which could lead to a bearish breakout.
However, with the recent decline in US Treasury Yields, the mood might change a bit and this could extend the consolidation period before we can finally see a breakout.
In summary, the EUR/USD currency pair will provide traders with multiple short-term trading opportunities while the US-China trade conflicts continue to weigh on the pair.
With the EU lacking enough fundamentals fire-power to trigger a major bull-run, the current consolidative shape could continue for a while.