- EUR/USD is better bid above 1.12, having charted a bullish candle on Thursday.
- The focus is on EUR/JPY as the US has doubled tariffs on China.
- A below-forecast US CPI could push EUR/USD above the resistance at 1.1251.
EUR/USD is currently trading above key trendline resistance, having charted bullish outside reversal candle on Thursday.
The common currency is reporting gains with a near 1.1230 print even though the US has more than doubled tariffs on the $200bn worth of Chinese goods, re-escalating trade tensions.
EUR/USD's resilience could be associated with the fact that the EUR/JPY cross is better bid above 123.00, despite the 0.30% drop in the S&P 500 futures at press time. The offshore yuan's recovery from the four-month low of 6.8635 seen on Thursday may be helping EUR/USD remain bid.
That said, the JPY could pick up a strong bid if the European equities fail to track Asian equities higher. In that case, EUR/JPY may fall back below 123.00, pushing EUR/USD lower.
It is worth noting that the US-China trade talks have been extended to Friday. However, with the US' decision to raise tariffs, the probability of a breakthrough in negotiations has dropped.
As a result, the European markets will likely trade in the red. So, EUR/USD may have a tough time climbing the previous day's high of 1.1251.
A close above that level is needed to validate the bullish outside reversal candle created on Thursday and open the doors to 1.1324 (April 12 high).
That move may happen in the American session if the data due at 12:30 GMT shows the US inflation, as represented by the Consumer Price Index, decelerated in April, validating the Fed's decision to pause rate hikes.