EUR/USD bulls remain on top, eyes for higher levels in the 1.19s
|- EUR/USD consolidates in a choppy range while bulls remain broadly in charge.
- The 1.19s on failures to break the 1.1850s is back on the cards.
EUR/USD is currently trading at 1.1870 between a turbulent range of 1.1818 and 1.1916 as stops are triggered either side of structural levels around 1.1850 and 1.18080.
There is a lot of indecisiveness showing in price action in this pair.
In Asia, the price was forming bearish intentions before a huge bid came into the pair and took the 1.19 level out, carving through stop losses to the aforementioned highs.
The price then dumped to 1.1840s, doing damage to long positions, to then form a choppy range throughout Europe and into New York between there and the 1.1860s.
The market is currently testing the 1.1880s again as the indecisiveness continues while the greenback cannot catch a sustainable bid.
Markets are buying into any ounce of positiveness
The FX space is closely correlating to the equity markets, with the euro acting as an opposite trade to the dollar which is being punished by consistently higher stocks and a resurgence in oil prices this week.
We had a bid in the US data in yesterday's ISM services index and we also had bullishness in comments from US officials.
US Treasury Secretary Mnuchin said that the Democrats and the Republicans will try to reach a deal by the end of the week.
The combination of a higher oil price, inflation expectations moving higher and good risk appetite weighed further on the US dollar which is keeping the euro elevated towards the 1.19 level.
As for coronavirus, all is being shrugged off when it comes to the ramifications of the global economy pertaining to the US spread, but markets are encouraged instead by the tightening of the spread for periphery euro countries like Spain and Italy.
Watching US-China tensions
US secretary of state Mike Pompeo urged American companies like Google and Apple to remove Chinese applications from its app stores yesterday.
The tech controversy with China is now ballooning beyond just that of TikTok which does not bode well for risk sentiment on the geopolitical front.
Further support for euro along the way
Markets will question how far the euro can travel before it becomes a thorn in the side for euroland businesses and a recovery in the member state.
Usually, a stronger euro will harm export and that has always been a conundrum for markets, betting on a recovery in the union and a strengthening of the currency which can be detrimental to growth outlooks.
However, this time around, there is more of a focus on covid headwinds which therefore means a stronger euro will more likely encourage more stimulus support fro policymakers, which in turn remains a bullish factor for the euro in light of a weakening US economy, in contrast and a softer dollar.
Congress needs to get an act together or the dollar's credibility will continue to deteriorate, especially in light of how soft the US economic recovery is turning out to be.
Nonfarm Payrolls, which hints point to an awful July, could be the nail in the coffin for the bears this week.
EUR/USD levels
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