Technical Analysis of EUR/USD on an hourly timeframe: 12/07/2023

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Political and security tensions between China and Japan have once again reached a peak. Recent remarks by Sanae Takaichi regarding Japan’s potential response to a Chinese attack on Taiwan have ignited a new wave of disputes—tensions that neither Donald Trump’s repeated calls with Xi Jinping and Takaichi nor diplomatic outreach have been able to contain. In this article, we take an analytical look at the dimensions of the crisis and its possible consequences.

In the hourly chart of EUR/USD, this currency pair initiated a fresh increase from the 1.0835 area, and the euro climbed against the US dollar towards the upper resistance zone at 1.0900. As a result, this currency pair found itself above the resistance level of 1.0975 and the 50-hour simple moving average.

Currently, the EUR/USD pair is consolidating its gains below the resistance level of 1.1040. If the downtrend continues, the critical support level near the 50-hour simple moving average at 1.0995 is crucial. If there is a bearish break below 1.0995, this currency pair could decline toward the support level of 1.0975.

In the bullish scenario, if this currency pair manages to register an upward trend toward the Fibonacci correction level of 1.236, it will potentially increase toward the level of 1.1040. Additionally, the next significant resistance is near the level of 1.1065. A bullish break above 1.1065 could lead to an increase towards the resistance level of 1.1120.