EUR/USD trades above 200-day MA ahead of German IFO surveys
- EUR/USD closed above the 200-day moving average on Friday.
- The pair is on the offensive with a bullish breakout on technical charts.
- Above-forecast German IFO surveys will likely bolster the bullish setup.
EUR/USD is looking north ahead of key German data release, having closed above the 200-day moving average (MA) on Friday.
The pair has found acceptance above the long-term moving average for the first time since May 1. 2018, and the big break is supported by bullish higher lows, higher highs pattern and inverse head-and-shoulders breakout on the daily chart.
Therefore, the path of least resistance is on the higher side and the pair will likely rise well above 1.14 later today if the German IFO surveys for June, scheduled for release at 08:00 GMT, show signs of green shoots in the Eurozone's largest economy.
The IFO expectations index is seen falling to 94.5 in June from 95.3 last month. Further, both the business climate and current assessment indices are expected to show a mild deterioration.
Weak data may not result in EUR weakness. This is because the deterioration in the German economic and business sentiment is generally accepted and priced in by now. The German ZEW Economic Sentiment survey plummeted to a lower-than-forecast -21.1 in June from -2.1 in May, the data released a week ago showed.
Further, Euribor futures fell on Friday following the release of the above-forecast German and French June manufacturing PMIs, according to Reuters. Meanwhile, Friday's below-forecast US PMIs likely reinforced the dovish Fed expectations.
As a result, the probability of the EUR extending the ongoing rally is high. As of writing, the pair is trading at 1.1382, having hit a high of 1.1386 – a level last seen on March 22.
The bullish case would weaken if the pair find acceptance below the former resistance-turned-support of 1.1348.
Technical levels