EUR/USD Forecast: Recovering, But Only Within A Downtrend Channel, Selling Opportunity?

• EUR/USD is ticking up below the 1.1400 level in the wake of a new week.
• Chinese related headlines dominate as the US is on holiday.
• The technical picture is bearish for the pair.

EUR/USD kicks off the new week with a gentle move toward 1.1400, trading within a limited range.

China reported an annualized GDP growth rate of 6.4% in the last quarter of 2018, and 6.6% for the whole year, the lowest in 28 years. However, these figures were priced expected and priced in by markets. The silver lining is that some hope that Beijing will provide economic stimulus to boost the economy, which is suffering from the trade war with the US among other issues. The cautiously optimistic mood, driven by these hopes of stimulus, helps stocks and also supports the common currency.

Another China-related topic has no silver lining. Trade talks with the US have reportedly hit a bump in the road as China denied any issues with Intellectual Property (IP) and forced technology transfer. The will of the second-largest economy to buy goods from the US is already priced in. Talks continue ahead of the March deadline to strike a trade deal.

In the US, the government shutdown continues with more and more reports of unpaid government workers struggling to make ends meet. President Donald Trump offered temporary relief for immigrant "Dreamers" in return for funding for a border wall. His offer was rejected by Democrats. Efforts to end the debacle continue. 

The pair is still licking its wounds from last week's drops which were due to concerns about slower growth in the euro-zone. Another minor indicator of that slowdown was seen in the fresh Producer Price Index (PPI) report from Germany, which showed a drop of 0.4% in December.

While Germany probably avoided a technical recession, growth has stalled, and other European countries are not doing that great. The German central bank, the Bundesbank, releases its monthly report later on.

The US session will likely be quiet as American markets are closed due to Martin Luther King Day. 

EUR/USD Technical Analysis