EUR/USD Bulls Target $1.10 on China GDP and Euro Area Stats

It is a busy day ahead for the EUR/USD. ZEW Economic Sentiment figures for Germany and the Eurozone and euro area trade data will be in focus.

The stats are EUR positive, with economists forecasting the euro area trade deficit to narrow from €30.6 billion to €11.9 billion. While a narrowing is EUR positive, the devil will be in the details. Trade terms with China, the US, and euro area member states will be focal points.

However, we expect the ZEW economic sentiment figures to have more influence. Economists forecast the German ZEW Economic Sentiment Index to rise from 13.0 to 15.3 and the Eurozone ZEW Economic Sentiment Index to climb from 10 to 13.

With the economic calendar on the busy side, investors should monitor ECB commentary today. However, no ECB Executive Board members are on the calendar to deliver speeches today, leaving chatter with the media to influence.

EUR/USD Price Action

This morning, the EUR/USD was up 0.08% to $1.09324. A mixed start to the day saw the EUR/USD fall to an early low of $1.09206 before rising to a high of $1.09361.

Q1 GDP numbers from China delivered a morning boost.

Technical Indicators

The EUR/USD needs to move through the $1.0944 pivot to target the First Major Resistance Level (R1) at $1.0979. A return to $1.0950 would signal a bullish session. However, the EUR/USD needs positive euro area economic indicators to support a breakout session.

In the case of an extended rally, the bulls will likely test resistance at the Monday high of $1.09998 and the Second Major Resistance Level (R2) at $1.1035. The Third Major Resistance Level (R3) sits at $1.1126.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1.0888 in play. However, barring a data-fueled sell-off, the EUR/USD pair should avoid sub-$1.0850. The Second Major Support Level (S2) at $1.0853 should limit the downside. The Third Major Support Level (S3) sits at $1.0763.

Looking at the EMAs and the 4-hourly chart, the EMAs send mixed signals. The EUR/USD sits above the 100-day EMA ($1.09009). The 50-day EMA narrowed to the 100-day EMA, while the 100-day EMA widened from the 200-day EMA, delivering mixed signals.

A move through the 50-day EMA ($1.09476) would support a breakout from R1 ($1.0979) to give the bulls a run at R2 ($1.1035). However, a fall through the 100-day EMA ($1.09009) and S1 ($1.0888) would bring S2 ($1.0853) into view. A move through the 50-day EMA would send a bullish signal.

The US Session

Looking ahead to the US session, it is a relatively quiet day on the US economic calendar. Housing sector data for March will draw interest, with housing starts and building permits due out. However, the US housing market appears to be off the Fed’s radar vis-à-vis monetary policy decisions, which should limit the influence of the numbers on the EUR/USD.

However, Fed chatter on monetary policy and the US economy would move the dial. We expect increased sensitivity to FOMC member commentary as the markets respond to guidance beyond May.