EUR/USD clocks two-week high, options regain bull bias

• EUR/USD clocked two-week high of 1.2429 in Asia. 
• One-month risk reversals have regained topside bias. 
• Focus on EZ GDP release and trade war fears. 

EUR/USD rose to 1.2429 in Asia - the highest level since Feb. 19 after Gary Cohn, advocate for free trade in the White House, announced his resignation boosting fears of a trade war. 

Also, the EUR/USD one-month 25 delta risk reversals have turned positive, meaning the implied volatility premium for EUR calls (bullish bets) is more than the implied volatility premium for EUR puts (bearish bets). As of writing, the risk reversals are being paid at 0.07 EUR calls vs. 0.275 EUR puts on Mar. 2. It indicates the options market has regained EUR bullish bias. 

Eurozone Q4 GDP is due at 10:00 GMT

The data is expected to confirm the economy expanded 0.6 percent quarter-on-quarter and 2.7 percent year-on-year in the fourth quarter as shown by the preliminary estimate released in February. That said, an upward revision of the GDP could yield another leg higher in the EUR.  

Focus on trade war talk

It is feared that Gary Cohn's resignation will embolden anti-free trade forces in the US. So, the EUR (backed by EZ current account surplus) will likely remain bid against the USD. Also, the greenback would take a beating if new Chief Economic Advisor is a "trade hawk" (someone who believes in protectionist policies). 

EUR/USD Technical Levels

As of writing, the pair is trading at 1.2418. A move above 1.2461 (76.4 percent Fibonacci retracement of Feb. 16 high - Mar. 1 low) would expose 1.25 (psychological hurdle) and 1.2556 (Feb. 16 high). On the downside, breach of support at 1.2403 (Asian session low) could yield a re-test of 1.2311 (10-day moving average). A close below the said level would allow a sustained drop to 1.2259 (50-day moving average).