EURUSD has been trending higher but slowly consolidating inside a rising wedge formation visible on the 1-hour and 4-hour charts.

This signals that a breakout in either direction could take place soon as price is approaching the peak of its formation. The wedge is approximately 400 pips tall so the resulting breakout could be of the same size, possibly taking EURUSD either to the 1.0350 lows or to highs at 1.1150. 

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. Stochastic seems to be on the move up but is nearing the overbought zone so buyers might be getting exhausted and ready to let sellers take control of price action. 

Economic data form the euro zone has been weaker than expected recently, as the German Ifo business climate index printed a surprise drop from 111.0 to 109.8 versus the projected rise to 111.3. As it turns out, German manufacturers are less optimistic about current and future business conditions in the country, possibly due to Brexit concerns. 

However, demand for the dollar has also been weak even as US equities have been advancing. Reports that Trump’s team has a list of 50 infrastructure projects that could rein in a lot of investment and employment have boosted stock indices to record highs but the US currency has failed to follow suit. 

Today has initial jobless claims, goods trade balance, flash services PMI, and new home sales due from the US. The euro zone is set to print the Spanish unemployment rate, German GfK consumer climate index, and Italian retail sales. 

By Kate Curtis from Trader’s Way