Lufthansa is the German flag carrier and Europe's largest airline with some 665 planes. Frankfurt Airport is its biggest hub. Image source: meinzahn © 123RF.com
Crucial Services PMI and Manufacturing PMI data in France and Germany was released earlier today, which underlined a moderate recovery in the net industrial activity of the Eurozone's two biggest economies.
Today's findings mostly exceeded the initial market expectations, with the only disappointment being the German Manufacturing PMI' weaker-than-expected growth.
Germany Manufacturing PMI. Image source: TradingEconomics.com
It's still very early to be talking of substantial normalisation of the aggregate industrial activity, as evidently, the PMI has to rise with at least ten index points to reach the pre-crisis levels of Manufacturing.
Nevertheless, even this moderate lift off from the bottom that was reached last month is an early indication of improvement. Investors and policymakers alike would be hoping this would mean that at least the initial shock from the coronavirus pandemic has now been overcome.
The mostly better-than-expected results from today have averted a potential new dropdown of EU stocks, which have been strengthening over the past several days on the agreement for fiscal relief that was reached between France's Macron and Germany's Merkel. As a consequence, major European indices started rising as well.
Despite today being a Bank Holiday in both Germany and France, which is why the overall trading activity is diminished, the euro continued its four-day rally on traders' renewed optimism from the welcoming industrial performance.
The EURUSD pair is currently attempting to form a new breakout above the major resistance level at 1.09880.
This is going to be a significant test for the bullish commitment in the market as the pair has already rebounded from set resistance level recently, which subsequently led to the development of a new bearish downturn.
The behaviour of the price action just above the resistance level is going to be especially telling of the next likely developments, subject to the particular types of candlesticks that form around the resistance.
Should any shooting starts or bearish Doji candles form there, similar to what happened last time the price action attempted to create a breakout, this would potentially be signifying the exhaustion of bullish sentiment and a potential trend reversal afterwards.
For the time being, however, the underlying momentum in the market remains ostensibly bullish, which favours the continuation of the current upswing's development above the crucial resistance level.
EURUSD 4H Price Chart. Image source: Trendsharks ©, created with TradingView.com
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