EUR/USD rises above 1.23, What's next - 1.2376 or 1.2236?

• EUR/USD looks set to take out trend high of 1.2323.
• Eyes preliminary PMIs.

EUR/USD moved above 1.23 in Asia and looks set to cut through the recent high of 1.2323.

The common currency ran into bids in the 1.2220 neighborhood and jumped to 1.2306 in the NY session yesterday, courtesy of an upbeat Eurozone consumer confidence data. The spot extended gains to a one-week high of 1.2318 in Asia on broad-based USD weakness.

Sino-US trade row and Upbeat EZ PMIs could lift EUR to 1.2376

Washington's decision to impose heavy tariffs on foreign solar panels and washing machines has been condemned by China. The resulting fears of a full-blown trade war between the world’s two biggest economies could keep the USD under pressure.

Also, the EUR could catch another bid wave in Europe if the preliminary Eurozone and German PMI numbers show picked up in the activity along with the rise in price pressures.

So, a move to 1.2376 (61.8% Fib extension of the Nov low-Nov high-Dec low) looks likely. That said, the overbought conditions as shown by the RSI could come into play, especially if Eurozone PMIs disappoint expectations. In such a scenario,  EUR/USD may revisit 1.2236 (127.2% Fib extension of the Nov low - Nov high - Dec low).

EUR/USD Technical Levels

FXStreet Chief Analyst Valeria Bednarik writes, "technically, the 4 hours chart shows that the pair continues trading within its latest range, although at the upper end of it, with a neutral-to-bullish short-term stance,  as the price is holding a handful of pips above a still horizontal 20 SMA, while technical indicators entered positive territory, but remain close to their mid-lines, with the RSI already losing upward strength. Despite the prevailing cautious mood, Tuesday's data can push the pair through the 1.2322 high set last week, sending it closer to the 1.2400 figure ahead of the key event of the week.   

Support levels:  1.2235 1.2200 1.2165

Resistance levels: 1.2320 1.2350 1.2380