EUR/USD - Bull case strengthens, eyes Draghi speech, US retail sales data

• Euro looks north as trade war fears flare again.
• Focus on Draghi speech.
• Dismal US data could yield stronger rally to 1.25.

The common currency nudged higher in Asia, pushing the EUR/USD to a four-day high of 1.2412, courtesy of turbulence in Washington and increased fears of full-blown US-China trade war.

China may retaliate by taking strong measures

In past trade confrontations with the US, China has often backed off, according to a Reuters report. But this time the world's second-largest economy may retaliate with tariffs that hurt US agriculture and manufacturing sector.

Euro could move above 1.2446 (March 8 high) if China responds with strong words to news of broader US tariffs on Chinese imports.

Draghi will likely sound dovish

ECB's Draghi, scheduled to speak at 08:00 GMT, will likely reiterate, there is no urgency in removing accommodation given the lack of inflation pressure. The Eurozone will also see  ECB's Praet speech at 8.45 GMT. Industrial production and employment change data for the Eurozone is due for release at 10.00 GMT. ECB’s Coeuré will wrap up the day with a speech at 16.15.

Focus on US retail sales

Consumption, as represented by retail sales, is seen rebounding 0.3 percent in February from a 0.3 percent drop registered in March. An above-forecast data will likely save the day for USD bulls. However, a weak data would only amplify the USD-bearish impact of growing fears of trade wars and would allow a stronger rally to 1.25 and above.

EUR/USD Technical Levels

A daily close above 1.2446 (March 8 high) would signal resumption of the rally from the March 1 low of 1.2154 and open doors for a sustained rally to 1.2556 (Feb. 16 high) and 1.26 (psychological hurdle). On the downside,  close below ascending 50-day moving average (MA) support of 1.2293 would allow a stronger retracement to 1.2206 (Feb. 9 low) and 1.2154 (March 1 low).