EUR/USD: Bull gaining strength ahead of Trump-Xi meeting

• EUR/USD is again looking north, according to technical charts.
• Two-year US-German yield differential hit lowest since Oct. 1, adding credence to bullish technicals.
• A better-than-expected Eurozone CPI and a surprise US-China trade deal would bode well for the euro and risky assets.

The EUR/USD closed well above 1.1388 yesterday, validating Wednesday’s bullish outside-day candle.

The bullish reversal seen in the daily chart is backed by a decline in the yield differential in the EUR positive manner. For instance, the two-year spread between the US and German government bond yields fell to 238 points yesterday – the lowest level since Oct. 1 – having topped out at 358 basis points on Nov. 8.

Therefore, the stage looks set for a re-test of the Nov. 20 high of 1.1472.

Notably, the odds of a rally to 1.1472 would rise sharply if the Eurozone’s preliminary consumer price index (CPI) for November, scheduled for release at 10:00 GMT today, blows past estimates, bolstering the possibility of an early ECB rate hike.

The common currency, however, may run into offers in the Asian session on Monday if the weekend’s Trump-Xi meeting fails to produce at the very least a pause in the trade dispute.

The recent high of 1.1472 could be scaled next week if the meeting between the US President Trump and China’s Xi ends on a positive note.

EUR/USD Technical Levels