It was all about consolidation in the past trading session. Will we see a big breakout on this pair next?
But first, here are the headlines you missed if you weren’t around during the Asian session:
Currency Snapshot
Fresh Market Headlines & Economic Data:
- U.K. GfK consumer confidence index up from -36 to -30
- Japanese national core CPI down by 0.2% vs. projected 0.1% dip
- Australian retail sales recover by 16.3% after earlier 17.7% slide
- U.S. condones with India on border clash with Chinese
- Oil prices slightly higher as OPEC remains firm on output cuts
Upcoming Potential Catalysts on the Economic Calendar:
- German PPI at 7:00 am GMT
- U.K. retail sales at 7:00 am GMT
- EU Economic Summit taking place
What to Watch: EUR/USD
With most ranges staying intact during today’s Asian session, this pair is chillin’ like a villain inside the falling wedge pattern on its 1-hour chart.
Price is testing support at the moment, and Stochastic pulling higher seems to be hinting that a bounce back to the resistance is due. A bullish divergence can also be seen as the oscillator made higher lows while EUR/USD had lower lows.However, the 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that support is more likely to break than to hold.
If that happens, EUR/USD could slide by at least the same height as the chart formation, which spans roughly 200 pips.
There’s not much in the way of big catalysts in the London session, though, so inflection points might just keep holding. Still, it’s worth noting that geopolitical tensions remain elevated, possibly tilting the odds in favor of risk-off flows.
The ongoing EU Summit, meanwhile, could keep the shared currency supported if leaders express stronger support for the EU Recovery Plan worth 750 billion EUR.
In any case, make sure you check the average EUR/USD volatility before you try to trade a bounce or break!