- The EUR/USD is trading in a narrowing range ahead of the Trump-Juncker meeting.
- The ECB meeting on Thursday is already causing tensions.
- The charts show a narrowing wedge with a marginal bullish bias.
The EUR/USD is trading just around 1.1700, holding onto recent ranges. The German IFO Business Climate came out at 101.7 against 101.5 that was expected. Other components of the report, coming from Germany’s No. 1 think tank, also beat expectations. The publication did not rock the boat.
President of the European Commission Jean-Claude Juncker meets US President Donald Trump later on. Juncker is a colorful character that once said: “When it becomes serious, you have to lie” among other interesting statements. His American counterpart is no less vivid and the meeting could yield market-moving headlines.
The most sensitive topic is trade relations between the EU and the US, with Trump’s threat of car tariffs being the most explosive topic. Ahead of the encounter, Trump tweeted that “tariffs are great” but also called for a tariff-free deal.
The European Central Bank convenes on Thursday to make its rate decision. No changes are expected. In the previous gathering, the Governing Council decided to reduce and end the bond-buying scheme by the end of the year but also pledged to keep interest rates at current levels “through the summer of 2019”. The outcome was a plunge in EUR/USD. A repeat of the move is unlikely, but ECB President Mario Draghi always moves the markets.
See: ECB Preview: All quiet on the monetary policy front until 2019
The other big event of the week is on Friday: US GDP. However, Trump took out part of the sting by leaking an annualized growth rate of 4.8%.
EUR/USD Technical Analysis
As the thick black lines show, the pair is trading within a narrowing triangle or wedge. Both uptrend support and downtrend resistance are well established.
Looking closer, we see that Momentum is slightly positive and that the EUR/USD is holding up above the 50 and 200 Simple Moving Averages on the four-hour chart.
Looking up, 1.1750 capped the pair earlier in the week and served as an initial resistance line. Further up, 1.1790 held the EUR/USD down in early July, and 1.1850 was the high point on June 14th.
On the downside, 1.1615 was a support line earlier in July. It is followed by 1.1575 which was a swing low last week and finally by 1.1508, the lowest level in 2018.
More: EUR/USD battling essential support, break or bounce? – Confluence Detector