EUR/USD: renewed US-China trade tensions may cap gains

• The EUR/USD’s daily chart is showing a falling wedge breakout.
• The bearish-to-bullish trend change may fail if the US-China trade tensions escalate.

The EUR/USD closed at 1.1416 on Friday, confirming a falling wedge breakout or bearish-to-bullish trend change.

So, the path of least resistance is now on the higher side. The pair, however, could fall back to ascending (bullish) 5-day exponential moving average (EMA), currently at 1.1366, courtesy of heightened US-China trade tensions. After all, the recently concluded APEC summit failed to produce a trade agreement. Further, the US Vice President Pence on Saturday expressed readiness to double the tariffs on China.  

The greenback may pick-up a strong haven bid if the global equities react negatively to renewed trade tensions.

The pair, however, may capitalize on Friday’s bullish breakout if the equities remain resilient, allowing markets to price in the possibility of a Fed rate pause in 2019. The comments from Fed officials last week revealed the policymakers are getting worried about the risks to the US economy due to the global economic slowdown, housing market, and rising fiscal deficit.

EUR/USD Technical Levels