EUR/USD: Trapped in a narrowing price range, Trump impeachment fears may hurt US dollar

• EUR/USD is trapped in a symmetrical triangle.
• Brexit uncertainty capped upside in the EUR/USD pair yesterday.
• A breakout may happen today as markets may offer USD on Trump impeachment concerns. Narrowing US-German (DE) yield differentials also favor breakout.

The EUR/USD pair created a bearish outside reversal on Monday and failed to pierce the upper edge of the symmetrical triangle on renewed Brexit uncertainty.  

UK PM May delayed a highly anticipated vote on the exit deal, which she agreed with the European Union (EU). The renewed uncertainty pushed the British Pound down to its lowest level since April 2017 and weighed over the risky assets.

As a result, the American dollar picked up haven bid and the bull breakout in EUR/USD remained elusive.

Moreover, the probability of a hard Brexit may have increased significantly in the last 24 hours. So, the risk assets may remain under pressure until more clarity emerges on Brexit.

The narrowing US-De yield differentials, however, may restrict the downside in the EUR/USD. At press time, the spread between the US 10-year yield and its German counterpart is seen 260 basis points – the lowest level since Oct. 1.

Further, the European and American FX desks may offer US dollars in response to reports stating that President Donald Trump is fearing impeachment after Democrats take over the House. The talk of impeachment has gathered pace in recent days following a filing from prosecutors which alleged that Trump committed an impeachable offense by directing Cohen to break the law during the 2016 presidential campaign.

A symmetrical triangle breakout, if confirmed, would open the door for a sustained move above 1.15.

EUR/USD Technical Levels