- EUR/USD’s bounce from the 5-day MA keeps the immediate bullish view intact.
- The EUR is showing resilience despite escalating trade tensions.
- The 100-day MA resistance above 1.13 could come into play if the German Zew survey betters estimates.
EUR/USD has bounced up from the ascending (bullish) 5-day moving average (MA) ahead of the key German and Eurozone data releases.
The reversal higher from the 5-day MA support marks a bullish follow-through to Monday’s bearish price action. The common currency rose to a high of 1.1263 only to close in the red at 1.1222 yesterday, forming a bearish inverted hammer candle.
The bearish candlestick was formed as China’s retaliation shattered the illusion that the US and China can reach a permanent trade deal. The world’s second largest economy announced new retaliatory tariffs on $60 billion worth of US goods, sending equities and commodities sharply lower.
However, despite China reigniting the tit-for-tat trade war, the EUR/USD pair found bids near the 5-day MA support of 1.1220 in Asia and is currently trading at 1.1240, up 0.15% on the day.
The bullish view put forward by the upside of break of the trendline connecting March 20 and April 17 highs is still intact.
With technicals biased bullish and the EUR showing resilience in the face of trade tensions, a rise to the 100-day MA of 1.1315 could happen in the next 24 hours if the German Zew survey, scheduled for release at 9:00 GMT, shows green shoots in the German economy.
Apart from the Zew survey, the EUR/USD may also take cues from the final German inflation for April, Eurozone industrial production for March and the broader market sentiment. As of writing, the S&P 500 futures are pointing to risk reset, which could bode well for the common currency.