EUR/USD Forecast: Looking better after setting a higher low, US data and Brexit eyed

EUR/USD is trading above 1.1220, emerging from the lower levels seen earlier. It enjoys a better market mood stemming from various developments.

The Financial Times reported that US-Chinese talks are making progress. China's Vice Premier Liu He is heading to the US for talks and his country announced several concessions towards the visit. There have been no details, but the report about a final trade agreement pushes stocks higher and the safe-haven US Dollar lower.

China's Caixin Services PMI beat expectations with 54.4 points, also adding to a better mood. The figures follow up on an upbeat Manufacturing PMI. 

Also on Brexit, things look better. PM Theresa May announced she will work with opposition leader Jeremy Corbyn to find a solution to break the logjam. Labour aims for a softer Brexit and the optimism for closer trade relations with the EU also helps.

In addition, centrist lawmakers are pushing a law to prevent a hard Brexit. It is unclear if they can succeed, but it is also putting pressure to avoid a no-deal exit on April 12th, in nine days. The rise of the pound helps the euro.

Back to the old continent, Services PMI is expected to be OK, with the euro-zone number confirmed at 52.7, above the 50-point threshold that separates expansion from contraction. As these are mostly final numbers, the US figure will likely have a much more substantial impact.

The ISM Non-Manufacturing PMI is projected to slip from the highs of 59.7 to 58.1 points, still reflecting robust growth. 

See:  US Non-Manufacturing Purchasing Managers’ Index Preview: Manufacturing leads the way

Beforehand, the ADP Non-Farm Payrolls will serve as a hint towards Friday's jobs report. An increase of 170K private sector jobs is on the cards. Both figures are set to rock markets. 

On Tuesday, US Durable Goods Orders missed expectations and temporarily weighed on the US Dollar. However, it recovered quickly.

It seems that the US Dollar remains the cleanest shirt in the dirty pile, but a mix of positive developments can change the picture. This is what we are seeing now. Will it continue? 

EUR/USD Technical Analysis

EUR/USD moved above the downtrend resistance line that capped it in recent days. The break higher is still unconfirmed. Downward Momentum on the four-hour chart has almost entirely disappeared. Perhaps the most considerable bullish sign is that EUR/USD set a higher low, above the 2019 trough of 1.1176.

However, the pair remains below the 50 and 200 Simple Moving Averages. 

All in all, there are tentative signs of improvement. 

Initial resistance awaits at 1.1230 which capped euro/dollar earlier in the day. 1.1250 was a high point early in the week. It is followed by 1.1285 which held down a recovery attempt last week and then by 1.1330 which was a peak last week as well.

1.1210 as a support line last week and 1.1176 mentioned earlier is the 2019 trough. Further down, 1.1115 and 1.1025 both date back to 2017.