EUR/USD Forecast: Bulls And Bears Are balanced, But Not For Long

• The EUR/USD is moving up within the narrow range.
• A tug of war between trade calm, US yields, and Brexit headlines keep the pair steady.
• The technical picture remains bullish for the EUR/USD.

The world's most popular currency pair is flirting with the 1.1700 level once again, holding up in the high range that characterized its trading in recent days. EU Leaders convene in Salzburg, Austria to discuss Brexit among other topics. The recent commentary by officials such as UK PM Theresa May, Irish PM Leo Varadkar, and EU Commission President Jean-Claude Juncker has reflected a deadlock in discussions. The British Pound is moving on every headline, and the common Euro is receiving some of the ricochets. 

Markets remain calm after the US announcement of a 10 percent tariffs on $200 billion worth of Chinese goods. The decision was telegraphed in advance, 10 percent is at the lower end of the range, and China's response has been relatively moderate. However, headlines from that front may move markets. So far, the calm pushed the US Dollar down.

On the other hand, the greenback enjoys rising US yields. The benchmark 10-year Treasury yield has settled above 3 percent. The effect is mostly felt against the Yen, but the EUR/USD also feels part of it.

In the euro-zone, concerns remain about the Italian budget. Coalition partners want to surpass the 2 percent deficit while Finance Minister Tria and European officials want a lower one. The story is currently on the backburner but may come to the forefront. 

The economic calendar remains light with the Philly Fed Manufacturing Index and Existing Home Sales coming from the US. Euro-zone consumer confidence and a speech by Bundesbank President Jens Weidmann stand out in Europe. All these events play second-fiddle to trade tensions, yields, and Brexit headlines. 

Eventually, something will have to give. A long period of stability is usually followed by an explosive move. The market is yet to choose a direction.

EUR/USD Technical Analysis

The EUR/USD continues trading above the 50 and 200 Simple Moving Averages on the four-hour chart. Momentum and the Relative Strength Index also point to the upside, albeit not that significant. 

1.1725 was a high point earlier this week and also last week. Very close by, 1.1735 was the peak in August, and 1.1750 was a quadruple top in July. 1.1795 was the high point in July, and 1.1850 was a swing high in June.

1.1650 was the low point on Wednesday and also coincides with the 50 SMA. 1.1605 was a stepping stone for the EUR/USD on its way up last week. 1.1565 served as the trough previous week before the triple bottom of 1.1530.