EUR/USD firmer ahead of Lagarde, Powell
EUR/USD adds to the optimism seen at the beginning of the week and manages to re-visit the 1.1800 neighbourhood for the first time since mid-September.
In fact, the weak note surrounding the greenback keeps dominating investors’ sentiment in the first half of the week on the back of positive news from the US political scenario, where Trump’s health and chatter around another stimulus bill sustain the appetite for riskier assets.
EUR also met some support following positive results from the German industrial sector and mixed prints from the Construction PMIs in Euroland. In addition, ECB’s Lagarde reiterated the central bank does not target the exchange rate, adding that the recovery in the region is still surrounded by uncertainty and asymmetry.
Later in the session, all eyes will be once again on ECB’s Lagarde and the speech by Fed’s Powell at the NABE event.
What to look for around EUR
EUR/USD appears to have met a strong barrier in the 1.1800 area so far, where converge the 55-day SMA and just above the immediate resistance line. The pair’s outlook still remains constructive and bearish moves are deemed as corrective only. Further out, the positive bias in the euro remains underpinned by auspicious results from domestic fundamentals (which have been in turn supporting further the view of a strong economic recovery after the slump in the activity during the spring), the so far cautious stance from the ECB, the solid position of the EMU’s current account and hopes of extra stimulus in the US economy.
EUR/USD levels to watch
At the moment, the pair is gaining 0.17 at 1.1802 and a break above 1.1809 (weekly high Oct.5) would target 1.1917 (high Sep.10) en route to 1.1965 (monthly low Aug.18). On the downside, the pair faces immediate contention at 1.1709 (38.2% Fibo of the 2017-2018 rally) followed by 1.1612 (monthly low Sep.25) and finally 1.1495 (monthly high Mar.9).