During a slow-paced Wednesday morning in Europe, the EUR/USD is steadying its weekly declines, moving cautiously within a symmetrical triangle pattern
During a slow-paced Wednesday morning in Europe, the EUR/USD is steadying its weekly declines, moving cautiously within a symmetrical triangle pattern that has been noticeable for the past two months. This relative stabilization is in part due to encouraging data and updates from China, particularly the notable rise in China’s factory-gate inflation which has offset a lesser increase in consumer prices, contributing to the recent market stability.
In addition to this, reports sourced from Bloomberg regarding the Biden Administration’s strategy have given some relief to EUR/USD traders. The reports suggest that the US aims to focus solely on Chinese firms where more than half of their revenues stem from sectors like quantum computing and artificial intelligence (AI).
On the flip side, sentiments have been dented by unexpected taxation on banks’ windfall profits in Italy and downgrades of US financial institutions by global rating agencies. These factors, coupled with concerns about potential recessionary pressures in the UK and a deceleration in China’s economic growth, have exerted pressure on the EUR/USD .
From a technical standpoint, the EUR/USD’s upward momentum from the triangle’s lower boundary, complemented by a favorable RSI (14) reading, is giving some solace to the currency’s bulls.
However, obstacles remain. The triangle’s upper limit, near the critical 1.1000 mark, and the subsequent resistance around 1.1020 provided by the 200-SMA, seem to cap any immediate bullish movements.
On the downside, a breach of the triangle’s support at around 1.0930 might further tilt the scale in favor of the bears, potentially pushing the pair towards a previous monthly low near 1.0830. Yet, levels at 1.0910 and the rounded 1.0900 figure might offer some temporary reprieve for the EUR/USD .
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