EUR/USD Forecast: Ready to run? Lagarde's “license” to rise, coronavirus optimism point higher

EUR/USD has been moving higher as ECB speakers reiterate their comfort with the euro's value.
The resumption of a COVID-19 vaccine trial is outweighing rising cases in the old continent.
Monday's four-hour chart is painting a bullish picture.

Yohay Elam FXStreet

"We do not target the exchange rate" – Several members of the European Central Bank have echoed Christine Lagarde, President of the ECB, over the weekend. While officials from Vice President Luis de Guindos to Chief Economist Philip Lane said the euro's value impacts inflation, their lax approach is seen by some as a "license to rise."

Goldman Sachs went as far as saying EUR/USD's fair value is 1.30, citing the ECB's acceptance of a higher rate as one of the reasons for seeing it rise.

The world's most popular currency pair is trading 1.1850, gaining ground in response to Thursday's decision by the bank and also as the safe-haven dollar loses ground on fresh optimism about a coronavirus vaccine.

AstraZeneca and the University of Oxford announced that their COVID-19 immunization project – considered one of the world's most advanced – will resume in the UK. The Phase 3 trial was halted after one of the participants fell ill. Pfizer, a larger pharma firm, hopes to be able to supply doses of a vaccine by year-end.

Investors seem to be shrugging off the rise in coronavirus infections across the old continent. Spain, France, and Austria have been standing out in news reports. While cases are increasing, deaths remain at low levels and health systems are coping so far.

Source: FT

Falling COVID-19 infections and mortalities in the US are set to contribute to a "no-change" decision by the Federal Reserve later this week. The world's most powerful central bank announced a long-term dovish policy shift – prioritizing full employment at the expense of higher inflation.

America's Consumer Price Index figures came out above expectations in August, but are unlikely to move the needle for markets. Investors are also eyeing retail sales statistics due out on Wednesday, the same day as the Fed.

Overall, markets are upbeat after a turbulent week, and without surprisingly depressing news, Monday's session could see further EUR/USD gains.

EUR/USD Technical Analysis

Euro/dollar has moved above the 100 Simple Moving Average on the four-hour chart after advancing above the 50 and 200 SMAs earlier on. Momentum remains to the upside and the currency pair is holding above the uptrend support line it recaptured.

All in all, bulls are in control.

Some resistance awaits at 1.1875, which was a swing high late last week. The next level to watch is 1.1920, the post-ECB peak, followed by 1.1965 and 1.2010.

Support is at 1.1820, which was a cushion late last week and where the 50 SMA hits the price. The next level is 1.1780, a support line from early September, followed by 1.1750, a double-top formed in recent weeks.

More Lagarde gives the euro some legs, but the rabbit hole is near – how central banks move currencies

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

AUD/USD sticks to positive bias above 0.7100; lacks bullish conviction

AUD/USD trades with a positive bias for the second straight day, holding above 0.7100 in the Asian session on Friday as softer US bond yields keep US Dollar bulls on the back foot. Furthermore, hawkish RBA Governor Bullock's comments boost rate hike bets and support the Aussie. However, the Fed's hawkish outlook, along with geopolitical uncertainties, limits USD losses and caps the pair.

USD/JPY approaches 158.00 as Japanese Yen resumes decline

USD/JPY is resuming its upside in the European session on Friday, refreshing two-week highs and nearing 158.00. The Japanese Yen extends losses, despite the Bank of Japan's (BoJ) expected rate hike to 1.25% and hawkish Governor Ueda's comments, as two surprise dissents against the rate hike weigh on it.

Gold keeps the bid tone in place; still below $4,400

Gold adds to the optimism seen in the second half of the week, trading with decent gains just below the $4,400 mark per troy ounce on Friday. The precious metal’s advance finds traction in declining crude oil prices and fresh selling pressure on the US Dollar.

Why altcoin season isn't coming back — and what stole its capital

If, after two years of being frozen in ice, Katara and Sokka woke you up to the crypto market, it would seem like 100 years have passed. With Bitcoin soaring to record highs just over a year ago, everyone expected a routine altcoin season, where investors take profits from the top crypto to chase higher returns in altcoins.

BoJ Recap: Not as hawkish as expected

The BoJ raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks. Governor Kazuo Ueda said the policy phase had changed.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.