EUR/USD Forecast: A recovery we can believe in? Technicals and fundamentals point higher

EUR/USD extended its gains and tops 1.1200. The initial driver was USD weakness. The Core PCE Price Index came out at 1.6% YoY in March, below expectations and adding to the case for a more dovish stance by the Fed on Wednesday.

See Fed Preview: The good, the bad, and the ugly factors that determine the dollar's reaction

The second driver is upbeat European data. Euro-zone GDP beat with 0.4% QoQ and 1.2% YoY, in Q1 2019 above 0.3% projected and 0.2% last time on the quarterly figures. Earlier, French GDP came out at 0.3% QoQ and 1.1%, as expected. Spain's GDP beat with 0.7% QoQ and 2.4% YoY, above expectations. 

In addition, reading from Germany's states point to higher inflation in the continent's largest economy. The preliminary all-German figure is due at 12:00 GMT.

Additional figures are due in the US. The Employment Cost Index, Pending Home Sales, and especially Consumer Confidence are all eyed.

See CB Consumer Confidence Preview: Warranted Optimism

EUR/USD Technical Analysis

By breaking above 1.1200, the pair also cross the 50 Simple Moving Average on the four-hour chart, a bullish sign. Moreover, Momentum turned positive and the Relative Strength Index is edging higher. The technical picture certainly improved.

The next resistance line is at 1.1230 which supported the pair earlier this month and capped a recovery attempt last week. The 1.1255 level held EUR/USD down in mid-April and it is followed by 1.1280 that provided support when it traded on higher ground.

Support awaits at 1.1176 which was the previous 2019 trough and a separator of range. 1.1140 was the initial low before 1.1110 which was recorded on Friday and is the lowest in 22 months.