EURUSD failed to hold above 1.13 yesterday and finished in the negative territory amid a widespread rally in the greenback despite weak US industrial production data. However, the pair resumed the upside move on Wednesday as dollar turned bearish due to a better risk sentiment in the global financial markets.
Investors are cheering stronger-than-expected Chinese data. The world’s second-largest economy expanded by 6.4 percent in the first quarter, faster than the 6.3 percent forecast by economists. The result helped to ease concerns over the global economy and pushed higher riskier assets including the common currency.
Interestingly, against this backdrop, the euro ignored the reports that the German government is on course to cut its growth forecasts for 2019 to only 0.5%. It looks like traders are ready for such a move which has been priced in already.
In the short term, EURUSD needs to confirm a break above the 1.13 barrier and challenge the 1.1330 intermediate resistance in order to extend the rally. Otherwise, another wave of profit-taking could emerge if risk sentiment deteriorates.