EUR/USD: Trade optimism may bolster bullish setup
|- EUR/USD is better bid following Friday's bullish hammer candle.
- The US-China trade optimism could yield a test of the 200-day average resistance.
- On the data front, the focus is on the Eurozone Sentix Investor Confidence and the US Factory Orders.
The US-China trade optimism will likely bolster the bullish technical setup in EUR/USD, yielding a rise to the 200-day average at 1.1195. The pair is currently trading at 1.1170, representing marginal gain on the day.
The common currency dipped to a low of 1.1128 during the US trading hours on Friday after the US Nonfarm Payrolls bettered estimates. The drop, however, was short-lived and the currency pair ended the day on a positive note at 1.1165, forming a bullish hammer candle and invalidating buyer exhaustion or indecision signaled by Thursday's Doji candle.
The path of least resistance, therefore, is to the higher side. The bullish pressures could be strengthened by the US-China trade optimism and the resulting risk-on in the equities.
The US Commerce Secretary Wilbur Ross on Sunday said that licenses for American firms to do business with the blacklisted Chinese telecommunications giant Huawei will be granted “very shortly.”
Ross added further that the US and China have come far with phase one of the trade deal and an agreement could be signed soon.
Germany, the Eurozone's manufacturing powerhouse, has taken a big hit due to the US-China trade war. The trade optimism, therefore, could bode well for the German economy and the Euro.
On the data front, the final Manufacturing PMI numbers are due for release across the Eurozone. Also, Eurozone's Sentix Investor Confidence for November, due at 09:30 GMT, could influence the pair. Across the pond, the ISM-NY Business Conditions Index (Oct) and Factory Orders (Sep) data is scheduled for release.
Technical levels
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