EUR/USD Forecast: Parity proves to be a tough resistance to crack

After having failed to reclaim in the previous two trading days, EUR/USD has gathered bullish momentum and climbed to a daily high of 1.0033 early Thursday. The pair, however, seems to be having a difficult time extending its rebound.

The positive shift witnessed in risk sentiment helped the shared currency find demand on Thursday. With China introducing drastic measures to boost the economy, major Asian equity indices recorded strong daily gains and European stocks opened decisively higher. Additionally, US stock index futures were last seen rising between 0.7% and 1%, suggesting that risk flows could continue to dominate the financial markets in the second half of the day.

Meanwhile, Germany's Destatis announced earlier in the day that the annualized Gross Domestic Product (GDP) growth for the second quarter got revised higher to 1.8% from the flash estimate of 1.5%.

Other data from Germany showed that the IFO Business Climate Index edged lower to 88.5 in August from 88.7 in July. On a concerning note, IFO Economist Klaus Wohlrabe said that a recession in Germany was still on the cards and added that they were expecting the GDP to contract by 0.5% in the third quarter. While investors assess these comments, EUR/USD consolidates its daily gains at around parity.

In the second half of the day, the US Bureau of Economic Analysis (BEA) will release its second estimate of the second-quarter GDP growth. Markets expect the BEA to revise the Q2 growth to -0.8% from the initial estimate of -0.9%. Unless there is a bigger-than-expected revision, the dollar is unlikely to react to this data. The US Department of Labor will publish its weekly Initial Jobless Claims data as well later in the session.

It's worth noting that central bankers could give interviews on the sidelines of the Jackson Hole Symposium during the American trading hours. Ahead of FOMC Chairman Jerome Powell's speech on Friday, market participants will pay close attention to Fed policymakers' remarks.

EUR/USD Technical Analysis

On the four-hour chart, the Relative Strength Index (RSI) indicator recovered to 50, suggesting that sellers refrain from committing to additional losses for the time being. Moreover, EUR/USD broke above the descending regression channel coming from August 12 and the last four-hour candles closed above the 20-period SMA, pointing to a bullish shift in the near-term outlook.

In case the pair manages to hold above parity and starts using that level as support, 1.0020 (Fibonacci 23.6% retracement of the latest downtrend) aligns as immediate resistance ahead of 1.0060 (50-period SMA) and 1.0080 (Fibonacci 38.2% retracement).

On the downside, a four-hour close below parity could open the door for an extended slide toward 0.9960 (20-period SMA) and 0.9920 (end-point of the downtrend).