EUR/USD: upside favored on slightly stronger China data

The EUR/USD pair fell to 1.1353 on Friday, a level last seen on Jan. 4, and closed convincingly below the 50-day moving average (MA) for the first time Jan. 3.

A close below the key MA is backed by the bearish crossover between the 5- and 10-day MAs. Further, the 14-day relative strength index (RSI) has slipped into bearish territory below 30.00.

So, it could be argued that the path of least resistance is to the downside. The crucial support at 1.1306 (Jan. 3 low), however, may not come into play today, as the markets may buy euros on evidence that the economic slowdown in China is not as bad as expected by many.

Indeed, China's annualized growth rate slowed to 6.4 percent in the fourth quarter of 2018; the lowest level since early 2009. That, however, was expected and price-in. Further, industrial production expanded 5.7 percent in December, beating the estimated figure of 5.3 percent by a big margin.

That could keep the equities and the EUR better bid. Hence, the psychological resistance of 1.14 could be put to test, although further gains may remain elusive, courtesy of Sino-US trade tensions. The US Treasury has reportedly informed lawmakers about the lack of progress in the intellectual property (IP) dispute, which has been a major sticking point in the Sino-US trade negotiations.

The EUR could also take cues from Brexit news and the EUR/GBP flows.

EUR/USD Technical Levels