The Euro is trading higher against the U.S. Dollar on Friday, but posting an inside move as bullish traders took a breather as Sino-U.S. tensions escalated after China ordered the United States to shut its Chengdu consulate in retaliation for the closure of its consulate in Texas.
Euro traders are trying to decide whether to resume this week’s rally that was fueled by the European Union’s approval of a massive funding program, or take profits amid geopolitical concerns between the two economic powerhouses that threaten to derail the global economic recovery.
It’s basically a risk on or risk off decision. If risk is on then look for the EUR/USD to continue its rally. Risk off sentiment could encourage investors to return to the safe-haven U.S. Dollar.
Traders could be swayed by today’s U.S. Flash Manufacturing PMI and Flash Services PMI reports.
At 13:22 GMT, the EUR/USD is trading 1.1615, up 0.0019 or +0.17%.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through 1.1627 will signal a resumption of the uptrend.
The main trend changes to down on a trade through 1.1185. This is highly unlikely today, but the EUR/USD is trading inside the window of time for a closing price reversal top.
Daily Swing Chart Technical Forecast
Taking out 1.1627 will signal a resumption of the uptrend. This could trigger an acceleration to the upside. The daily chart indicates there is plenty of room to the upside with the next potential upside target the September 24, 2018 main top at 1.1816.
Taking out 1.1627 then closing under 1.1596 will form a potentially bearish closing price reversal top. If confirmed, this could lead to the start of a 2 to 3 day correction.
Potential support is the series of former tops at 1.1570, 1.1514 and 1.1496.
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