EUR/USD Bulls to Target a Return to $1.09 on a Busy Economic Calendar

It is a busy day for the EUR/USD. Early in the European session, finalized French inflation numbers for December will draw interest ahead of full-year German GDP figures for 2022. We expect the GDP numbers from Germany to have the most impact on the EUR/USD.

Economists forecast full-year growth of 1.6%, down from 2.6% in 2021.

Later in the session, the market focus will turn to industrial production numbers for Italy and the euro area and euro area trade data. Both sets of numbers for the euro area will provide direction. On Thursday, the ECB Economic Bulletin discussed a short-lived and shallow economic recession. The numbers will need to support the outlook.

Ahead of the stats, economic data from China will set the tone, with December trade data in the spotlight. However, with the economy fully reopened in January, the markets may be more forgiving of weak import and export numbers.

With the economic calendar on the busier side, ECB member commentary also needs monitoring. However, no ECB members are due to speak today, leaving investors to track chatter with the media.

EUR/USD Price Action

At the time of writing, the EUR was down 0.04% to $1.08477. A mixed start to the day saw the EUR/USD rise to an early high of $1.08525 before falling to a low of $1.08437.

Technical Indicators

The EUR/USD needs to avoid the $1.0815 pivot to target the First Major Resistance Level (R1) at $1.0904. A move through the Thursday high of $1.08670 would signal another bullish session. The GDP numbers from Germany and the euro area stats would have to be EUR-friendly to support a pre-US consumer sentiment report breakout.

In the case of an extended rally, the bulls will likely test resistance at the Second Major Resistance Level (R2) at $1.0956. The Third Major Resistance Level (R3) sits at $1.1096.

A fall through the pivot would bring the First Major Support Level (S1) at $1.0764 into play. However, barring a risk-off-fueled sell-off, the EUR/USD pair should avoid sub-$1.07 and the Second Major Support Level (S2) at $1.0675.

The third Major Support Level (S3) sits at $1.0535.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The EUR/USD sits above the 50-day EMA ($1.07038). The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the 50-day EMA ($1.07038) would support a breakout from R1 ($1.0904) to target R2 ($1.0956). However, a fall through S1 ($1.0764) would give the bears a run at the 50-day ($1.07038). A fall through the 50-day EMA would signal a shift in sentiment.

The US Session

It is a quieter day ahead on the US economic calendar, with prelim US consumer sentiment figures for January in focus. While the headline number will influence, investors should consider the sub-components, including the inflation expectations figure.

FOMC member chatter also needs monitoring. FOMC member Harker speaks today. Hawkish commentary and a pickup in consumer sentiment would support the greenback.