- EUR/USD closed above the 200-day moving average on Friday.
- The pair is on the offensive with a bullish breakout on technical charts.
- Above-forecast German IFO survey will likely bolster the bullish setup.
EUR/USD is looking north ahead of key German data release, having closed above the 200-day moving average (MA) on Friday.
The pair has found acceptance above the long-term moving average for the first time since May 1. 2018, and the big break is supported by bullish higher lows, higher highs pattern and inverse head-and-shoulders breakout on the daily chart.
Therefore, the path of least resistance is on the higher side and the pair will likely rise well above 1.14 later today if the German IFO survey for June, scheduled for release at 08:00 GMT, show signs of green shoots in the Eurozone's largest economy.
The IFO expectations index is seen falling to 94.5 in June from 95.3 last month. Further, both the business climate and current assessment indices are expected to show a mild deterioration.
Weak data may not result in EUR weakness. This is because the deterioration in the German economic and business sentiment is generally accepted and priced in by now. The German ZEW Economic Sentiment survey plummeted to a lower-than-forecast -21.1 in June from -2.1 in May, the data released a week ago showed.
Further, Euribor futures fell on Friday following the release of the above-forecast German and French June manufacturing PMIs, according to Reuters. Meanwhile, Friday's below-forecast US PMIs likely reinforced the dovish Fed expectations.
As a result, the probability of the EUR extending the ongoing rally is high. As of writing, the pair is trading at 1.1382, having hit a high of 1.1386 – a level last seen on March 22.
The bullish case would weaken if the pair find acceptance below the former resistance-turned-support of 1.1348.
Technical levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD rises to two-day high ahead of Aussie CPI
The Aussie Dollar recorded back-to-back positive days against the US Dollar and climbed more than 0.59% on Tuesday, as the US April S&P PMIs were weaker than expected. That spurred speculations that the Federal Reserve could put rate cuts back on the table. The AUD/USD trades at 0.6488 as Wednesday’s Asian session begins.
EUR/USD now refocuses on the 200-day SMA
EUR/USD extended its positive momentum and rose above the 1.0700 yardstick, driven by the intense PMI-led retracement in the US Dollar as well as a prevailing risk-friendly environment in the FX universe.
Gold struggles around $2,325 despite broad US Dollar’s weakness
Gold reversed its direction and rose to the $2,320 area, erasing a large portion of its daily losses in the process. The benchmark 10-year US Treasury bond yield stays in the red below 4.6% following the weak US PMI data and supports XAU/USD.
Bitcoin price makes run for previous cycle highs as Morgan Stanley pushes BTC ETF exposure
Bitcoin (BTC) price strength continues to grow, three days after the fourth halving. Optimism continues to abound in the market as Bitcoiners envision a reclamation of previous cycle highs.
Australia CPI Preview: Inflation set to remain above target as hopes of early interest-rate cuts fade
An Australian inflation update takes the spotlight this week ahead of critical United States macroeconomic data. The Australian Bureau of Statistics will release two different inflation gauges on Wednesday.