EUR/USD Bulls To Target a Return to $1.0950 on Q4 German GDP Stats
It is a busy day ahead for the EUR/USD. The Spanish economy will be in the spotlight early in the session. Following better-than-expected Q4 GDP numbers, prelim inflation figures for January will draw interest.
Later in the session, Eurozone business, consumer sentiment, and consumer inflation expectation figures will also provide direction. However, prelim German GDP numbers for Q4 will likely have the most influence.
Economists forecast the German economy to stall in Q4 and for year-over-year growth to slow from 1.2% to 0.8%. Last week, the German government announced that Germany should avoid a recession in 2023. Better-than-expected numbers should support a bullish EUR/USD response.
While the economic calendar is on the busier side, investors need to consider ECB member speeches. However, no members are due to speak today, leaving chatter with the media to influence.
EUR/USD Price Action
At the time of writing, the EUR was flat at $1.08661. A mixed start to the day saw the EUR/USD fall to an early low of $1.08586 before steadying.
The EUR/USD needs to move through the $1.0869 pivot to target the First Major Resistance Level (R1) at $1.0899 and the Friday high of $1.09005. A return to $1.09 would signal a bullish session. However, the EUR/USD would need hotter-than-expected inflation and GDP numbers to support a breakout.
In the case of an extended rally, the bulls will likely test the Second Major Resistance Level (R2) at $1.0931 and resistance at $1.0950. The Third Major Resistance Level (R3) sits at $1.0994.
Failure to move through the pivot would leave the First Major Support Level (S1) at $1.0837 in play. However, barring a risk-off-fueled sell-off, the EUR/USD pair should avoid sub-$1.080. The Second Major Support Level (S2) at $1.0806 should limit the downside.
The third Major Support Level (S3) sits at $1.0743.
Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The EUR/USD sits above the 50-day EMA ($1.08568). The 50-day EMA moved 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 ($1.08568) would support a breakout from R1 ($1.0899) to target R2 ($1.0931) and $1.0950. However, a fall through the 50-day EMA ($1.08568) and S1 ($1.0806) would bring the 100-day EMA ($1.08064) and S2 ($1.08051) into play. A fall through the 50-day EMA would signal a shift in sentiment.
The US Session
It is a quiet start to a busy week on the US economic calendar. There are no economic indicators to provide direction in the US session. The lack of stats will leave market risk sentiment to influence in the second half of the day.
No FOMC members are speaking today. The Fed entered the blackout period on Saturday, January 21.