EUR/USD Forecast: Chinese Optimism Not Enough To Push It Above Critical Resistance

• EUR/USD is trading around $1.2325, balanced on the day but above the lows.
• Chinese President Xi's optimistic message about trade helps the euro.
• The technical picture remains mixed, with the 50-day SMA capping the pair.

The EUR/USD is trading around $1.2325, up from around $1.2302 earlier on. Chinese President Xi Jinping spoke in the Boao Forum and promised to open up the Chinese economy and also reduce tariffs. The mood music was positive, sending stocks and risk currencies higher even though he did not offer many details. This comes after reports of a potential devaluation of the Chinese yuan and as China complains to the WTO about US tariffs. 

In comparison with commodity currencies, the EUR/USD was somewhat late to react to the news but still enjoyed it. Things are a bit more mixed in the euro-zone.

ECB member Ewald Nowotny offered a balanced message without making any commitment to either direction. He just stated that the ECB should find a balance between preventing an overheating, especially of asset prices, while not choking the recovery. Italian industrial output disappointed with a fall of 0.5 percent against a rise of 1 percent expected earlier.

Later in the US, the Producer Price Index takes center stage. Headline PPI is expected to rise by 0.1 percent after 0.2 percent beforehand. Core PPI is projected to repeat the 0.2 percent increase in March, just like in February.

It is also important to note the political developments in the US. The FBI raided Michael Cohen's house, hotel room, and offices in a rare warrant against an attorney. Cohen is President Trump's lawyer. Trump has responded angrily, saying it is an attack against the country. So far, we have not seen a reaction in currencies.

EUR/USD Technical Analysis- Mixed

The EUR/USD is trading just under $1.2335, where the 50-day Simple Moving Average awaits. The line capped the pair since early April. 

The RSI and Momentum are slightly positive but remain close to balanced, indicating no significant movement. 

The SMA-50 is closely followed by $1.2345 which capped the pair last week. Further above, $1.2412 stopped the pair on March 14th. It is supported by $1.2480, a swing high in late March. 

Looking down, we find the March 21st high of $1.2240. It is closely followed by the April low of $1.2210 before the February trough of $1.2155.