The EUR/USD currency pair continues to consolidate within a descending wedge and now appears to be firmly holding above the 1.1200 level. The pair has been on a bearish trend over the last 12 months which now appears to be moving towards a potential breakout.
Recently, rebounds and pullbacks have become shorter while the general movement remains on a converging channel. This could be exciting to both the bulls and the bears as we draw nearer to the end of the week.
EUR/USD Fundamentals Overview
The euro appeared to rally back against the greenback early on Thursday after the latest trade balance beat consensus estimates. The EU Trade Balance s.a (seasonally adjusted) came in at EUR 17.9 billion compared to a forecast of EUR 17.1 billion. This was a significant decline from the previous period figure of EUR 19.5 billion.
The Trade balance n.s.a (not seasonally adjusted) faired better registering a significant improvement from the previous period at EUR 22.5 billion versus EUR 17.9 billion. It also blew analyst expectation of EUR 19.9 billion.
EUR/USD Technical Analysis (the 240-min Chart)
From a technical perspective, the EUR/USD currency pair has been trading within a converging wedge. As demonstrated using the Pitchfan in the 240-min chart above, the pair has now consolidated centrally.
This creates interesting opportunities for both the bulls and the bears. Going into the final stages of this week, the bulls will target opportunities around 1.1264 while the bears will look down below around 1.1133.
The Relative Strength Index (RSI) indicator suggests that the pair could move either direction as it is pegged centrally from the perspective of the market sentiment.
EUR/USD Technical Analysis 9the Daily Chart)
In the daily chart, the EUR/USD currency pair trades below both the 100-Day and the 200-Day MA lines. This suggests that there could be downward pressure in the long-term, that’s not yet detected by the RSI indicator below.
As such, the bears will look to maintain control while the bulls will target every potential rebound to pounce. And with fundamentals leaning towards the greenback, the bears will be more optimistic going into next week.
In summary, the EUR/USD currency pair bearish movement in a converging wedge continues. This could culminate with a major breakout in the pair.