EUR/USD: Bulls need an upbeat German IFO Expectations figure to scale key resistance

EUR/USD has added nearly 150 pips so far this week. However, bulls are yet to clear key resistance, which has repeatedly capped upside this year.

The currency pair is currently trading near 1.1316, having begun the week at 1.1173 and printed a high of 1.1349 on Tuesday. The pullback from 1.1349 to 1.1173 marks the failure on the part of the bulls to keep gains above the 200-week simple moving average (SMA), currently at 1.1331. 

Moreover, the pair has failed multiple times over the last three weeks to establish a strong foothold above that SMA hurdle. Similarly, the break above the 200-week SMA seen in early March was short-lived. That is evident the long upper wick attached to the candle representing price action seen in the first week of March. 

Hence, a convincing weekly close above the 200-week SMA could bring in stronger chart-driven buying, leading to significant gains. 

The breakout, however, hinges on the German IFO data for June, scheduled for release on Wednesday at 08:00 GMT. The focus would be on the forward-looking Expectations index, which is forecasted to rise to 87.00 from the preceding month's print of 80.1. 

A big beat on estimates would reinforce market expectations for faster recovery in the Eurozone's largest economy and may strengthen the bid tone around the shared currency. Moreover, the economic activity has recovered somewhat since the March crash. Manufacturing and service sector activity improved in Germany in June, the preliminary PMIs released on Tuesday showed. 

Apart from the IFO numbers, the pair may take cues from the broader market sentiment. The talk of a new $1 trillion-plus stimulus package in the US is likely to keep equities bid and the safe-haven US dollar under pressure. 

Technical levels