The EUR/USD currency pair has shown remarkable resilience, rallying above all its moving averages. This upward trend comes as the 100 Simple Moving Average (SMA) advances above a flat 200 SMA, signaling a potential shift in market dynamics. Intraday support was found in a mildly bullish 20 SMA, currently hovering around 1.0365, while the pair continued to climb, reaching the 1.0430 region during European trading hours on Wednesday. This marks the third consecutive day of gains for the EUR/USD, posting higher highs and higher lows after a sharp decline earlier in the week.
The technical indicators suggest that the EUR/USD pair may experience additional gains in the near term, although it faces resistance at key levels of 1.0445, 1.0490, and 1.0530. The Momentum indicator's position in overbought territory hints at a possible correction lower in upcoming sessions. Meanwhile, external economic factors continue to play a significant role. The EUR/USD pair's resurgence coincides with the release of the US ADP Employment Change report, which revealed that 183,000 new jobs were added in January's private sector.
Economic data from Europe also influenced market sentiment. The December Producer Price Index (PPI) in the European Union rose by 0.4% monthly, aligning with expectations. In Germany, the Services PMI held steady at 52.5, while the EU index slightly declined to 51.3 from a preliminary estimate of 51.4. The final EU Composite PMI matched the earlier estimate of 50.2, reflecting steady economic activity within the region.
The EUR/USD pair's current trading position above its critical support level of 1.0400 underscores its relative strength. The advancing 100 SMA above a flat 200 SMA further points to increased bullish potential. However, broader global economic uncertainties loom large, particularly with the anticipated resumption of the US-China trade war. The return of tit-for-tat policies between these economic giants could have far-reaching impacts on the global economic landscape.
As the US-China trade tensions are expected to escalate, currency traders and investors remain cautious about potential market volatility. These geopolitical developments could influence global trade flows and impact currency valuations, including the EUR/USD pair.