- EUR/USD is chipping away at key trendline hurdle.
- Breakout may remain elusive if Eurozone data disappoints expectations.
- China trade data is expected to show a surge in exports in CNY terms.
EUR/USD is having another go at the resistance of the trendline connecting May 30 and June 18 lows.
As of writing, the trendline resistance is seen at 1.1272. The spot did rise above that technical line on Thursday but failed to breach the resistance on closing basis.
A convincing break higher could be seen later today if the Eurozone industrial production data for May, due at 09:00 GMT, blows past expectations, alleviating concerns of deeper economic slowdown in the 17-nation currency bloc.
German factory activity had cooled significantly in May. As a result, the probability of the Eurozone data missing estimates is high.
Further, China’s trade data for June is scheduled for release later today. Notably, exports are forecasted to rise 21.4%year-on-year. A below-forecast export and import numbers would imply weakening of both external and internal (China’s domestic) demand conditions and could lead to risk aversion.
A combination of weaker-than-expected China and Eurozone data will likely reinforce expectations of another wave of monetary stimulus from the European Central Bank, sending the EUR/USD pair back to the 50-day moving average (MA) support, currently at 1.1241.
On the other hand, a big beat on China data may bode well for the EUR. Gains, however, could be short-lived, or may remain elusive if details reveal a surge in China’s trade surplus with the US. Technically speaking, EUR/USD needs to break above the recent high of 1.1412 to confirm a bullish bias.