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EUR/USD flat ahead of durable goods data

Will the EUR/USD pair confirm its massive bullish pattern, or is the downtrend going to continue? We might see soon..

Volatility has been minimal on Wednesday, and the EUR/USD pair was seen unchanged ahead of the US session, expecting some important data later in the day.

Hawkish ECB failed to support euro

Earlier in the day, the European Central Bank (ECB) Vice President Luis de Guindos said that the central bank could improve some macroeconomic projections for the Eurozone in a few days . Additionally, he added that third-quarter indicators look positive. However, despite his bullish/hawkish comments, the EURUSD pair failed to move and remained stuck near 1.1750.

German data weaker than expected

Additionally, German IFO disappointed, and the expectations gauge dropped notably to 97.5 in August, down from 101 previously , while the business climate subindex declined from 100.7 to 99.4. The current assessment, as the least important of those three, improved to 101.4 from 100.4 earlier.

70% of industrial businesses complain about supply chain bottlenecks. Also, export expectations have fallen but remain at a relatively good level. Two-thirds of companies in both manufacturing and retail sectors want higher prices to cover rising costs. Rising covid-19 infections have dampened expectations in tourism and hospitality. The IFO’s Economist Klaus Wohlrabe said after the data. EURUSD exchange rate

US number in focus now

Later in the day, US durable goods orders will be released. Investors expect the gauge to drop notably, from 0.9% to -0.3% on a monthly basis , while the capital goods orders indicator is forecast to slow to 0.5% from 0.7% previously. Weaker data might undermine the USD, but volatility should not be elevated until Friday, when Jay Powell will talk about tapering.

Should he fail to announce the start of tapering, i.e., sound dovish, the USD will most likely decline sharply. On the other hand, if he actually announces the start of tapering, it could be a bullish impetus for the dollar.

Technically, EURUSD looks bullish

The daily chart of the EURUSD pair is starting to look very bullish as the pair has formed a massive falling wedge pattern, which is a bullish reversal formation. The wedge is also supported by a substantial divergence between the price and the indicator.

Should the euro start rallying, the 1.18 seems like the next target, and breaking above would make the wedge pattern valid. The full potential of the formation could be in the 1.21 region, but on the way there, there are two strong selling zones: 1.19 and 1.20.

Alternatively, if the bearish pressure reappears, the support might be located at 1.17 and afterward at the current cycle lows of 1.1650. Should the euro break below 1.1650, the long-term downtrend would be confirmed.

EUR/USD daily chart falling wedge EUR/USD daily chart falling wedge

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