EUR/USD Bulls to Target $1.0950 on German Business Sentiment

It is a relatively busy day ahead for the EUR/USD. Following the German consumer sentiment and private sector PMIs on Monday, German business sentiment will be in the spotlight today.

Easing energy prices, a return to growth for the private sector, and a reaction to the January reopening in China could support a boost in sentiment. Eurosystem staff projections of a shallow and short-lived euro area recession also favor a pickup in business sentiment.

However, expectations of an aggressive ECB interest rate trajectory and the war in Ukraine remain headwinds. There is also lingering uncertainty over the US economic outlook.

Economists forecast the Ifo Business Climate Index to rise from 88.6 to 90.2. A better-than-expected headline number would support the EUR/USD.

There are no ECB member speeches for investors to consider following the latest round of stats, leaving member chatter with the media to influence,

EUR/USD Price Action

At the time of writing, the EUR was up 0.08% to $1.08910. A mixed start to the day saw the EUR/USD fall to an early low of $1.08805 before rising to a high of $1.08934.

Technical Indicators

The EUR/USD needs to avoid a fall through the $1.0872 pivot to target the First Major Resistance Level (R1) at $1.0909. A move through the Tuesday high of $1.08979 would signal an extended rally. However, the EUR/USD would need better-than-expected German business sentiment numbers to support a breakout.

In the case of an extended rally, the bulls will likely test the Second Major Resistance Level (R2) at $1.0935 and resistance at $1.0950. The Third Major Resistance Level (R3) sits at $1.0998.

A fall through the pivot would bring the First Major Support Level (S1) at $1.0846 into play. However, barring a data-off-fueled sell-off, the EUR/USD pair should avoid sub-$1.08. The Second Major Support Level (S2) at $1.0809 should limit the downside.

The third Major Support Level (S3) sits at $1.0746.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The EUR/USD sits above the 50-day EMA ($1.08278). The 50-day EMA pulled further away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above S1 ($1.0846) and the 50-day EMA ($1.08278) would support a breakout from R1 ($1.0909) to target R2 ($1.0935). However, a fall through S1 ($1.0846) and the 50-day EMA ($1.08278) would bring S2 ($1.0809) into play. A fall through the 50-day EMA would signal a shift in sentiment.

The US Session

It is a quiet day ahead on the US economic calendar. There are no US economic indicators for investors to consider, leaving corporate earnings to influence market risk sentiment.

Boeing (BA), IBM (IBM), and Tesla (TSLA) are among the big names releasing earnings results today.

However, there are also FOMC members speaking today to influence, with the Fed having entered the blackout period on Saturday.