EUR/USD: 20-day MA support intact despite solid USD wage growth figure, eyes ZEW survey

• The EUR/USD defended the ascending 20-day moving average (MA) on Monday despite Friday's upbeat US payrolls and wage growth release.
• Bear failure to penetrate a key MA support has likely left the doors open for the bulls to make their presence felt.
• A better-than-expected German ZEW survey and Eurozone employment figure could put a strong bid under the EUR.

The EUR/USD could gain altitude in the near-term, having defended the key 20-day MA support yesterday despite strong US data.

US wage growth hit a nine-year high in August, signaling that the tighter labor market is finally fueling wage-price inflation. As a result, the 10-year treasury yield jumped to a three-week high of 2.95 percent, lifting the USD higher across the board.

The greenback extended the post-payrolls rally yesterday, still, the EUR/USD defended the 20-day MA and is now trading 1.16 - well above the 20-day MA level of 1.1575.

Further, the 10-year Italy-Germany yield spread has dropped more than 50 basis points in the last six days, indicating easing concerns regarding Italy's fiscal health.

As a result, the EUR looks set to gain altitude in the near-term. The rally could gather pace if the German ZEW survey indices, due for release at 09:00 GMT, beats estimates and pushes the currency pair above the trendline sloping downwards from the Aug. 30 low and Sep. 6 low.

Meanwhile, a weaker-than-expected data would be bad news, although only a daily close below the 20-day MA of 1.1575 would weaken the bull case.

EUR/USD Technical Levels

Resistance: 1.1611 (50-day MA), 1.1638 (falling trendline hurdle), 1.1659 (Sep. 6 high)

Support: 1.1585 (Aug. 31 low), 1.1526 (Sep. 10 low), 1.15 (psychological level)