EUR/USD: how will pair react to FED minutes and US-China negotiations? (UOB / Commerzbank)

After threatening to enter a bearish safe-haven yesterday, with a drop below the 200-hour moving average and a trough at 1.0940, the EUR/USD pair was rising again yesterday.

From a technical point of view, it should be noted that Tuesday's fall resulted in a brief break under the 1.0950-1.10 range in place since 2 October, while yesterday's rise has allowed the pair to return to this range.

In the short term, and from a group point of view, uncertainty still dominates the EUR/USD pair, although the return above the 100-hour moving average is an encouraging signal.

However, as we have already pointed out above, only a return above the key psychological threshold of 1.10 would indicate a decline in vendor dominance sufficient to allow long positions to be considered from a non-intraday perspective.

In the event of a break above 1.10, the first potential buyer resistances and targets will be 1.1025, 1.1050 and 1.11.

On the downside, 1.0950, which represents the bottom of the short-term range and the 200-hour moving average, remains a critical support level.

A breach below this threshold would potentially put the psychological threshold of 1.09 in the line of fire, ahead of the annual low of the 1.0880 zone.

EUR/USD hourly chart

What upcoming events could influence the pair?

This week's news is marked by the resumption of trade negotiations between China and the US, with meetings scheduled to begin today in Washington.

There have been many developments, but yesterday they were erased by declarations from China that it is ready to sign a partial agreement with the United States, as long as Trump agrees not to further increase customs duties on Chinese products.

From the point of view of currency traders, it should be noted that positive statements following this week's meetings would benefit the greenback by reducing the chances of the Fed lowering its rates again, while a negative outcome would increase this probability and cause the dolalr to fall.

What are the banks' forecasts?

Finally, we will end this daily update on EUR/USD by focusing on the short-term forecasts of a few banks.

For example, UOB Bank's analysts maintain a neutral position on the pair, adding that the inability to break above 1.10 in the short term could lead to additional losses:

"We pointed out on Tuesday that "unless there is a net break through 1.1000, the euro could fall to 1.0950″. We added, "the next support at 1.0930 is a relatively strong level and is unlikely to give way". The euro then reached 1.0995 before falling to 1.0939 during NY business hours. In the short term, the risk remains on the downside and a break of 1.0930 would not be surprising. That said, the next support level at 1.0905 is probably out of reach. The first resistance level is at 1.0980 followed by 1.1000. This last level now acts as a very solid resistance.

As for Commerzbank, it suggests that the EUR/USD "will have to close above the 4-month downward trend at 1.1022 to confirm a bullish bias and ease downward pressure. This could trigger a recovery to a peak in mid-September at 1.1110."