- EUR/USD adds to recent gains above the 1.18 yardstick.
- The pair’s leg lower seems to have met support around 1.1800.
- German final CPI came in flat MoM and rose 3.9% YoY.
The optimism around the European currency stays well and sound in the second half of the week and underpins the EUR/USD move to 2-day highs in the 1.1840/50 band.
EUR/USD stays bid after ECB event
EUR/USD advances for the second session in a row on Friday and manages well to extend the bounce off weekly lows in the 1.1800 neighbourhood, always on the back of the retracement in the dollar and the generalized upbeat mood in the risk complex.
In fact, the single currency trades on a firmer note following the dovish “recalibration” of the ECB’s PEPP and auspicious revisions of the central bank’s forecasts for both inflation and GDP. In addition, Chairwoman Lagarde suggested that the timing of the end of the emergency stimulus programme as well as other policy guidance issues will be discussed at the December meeting.
In the euro docket, German final inflation figures showed the headline CPI came in flat on a monthly basis in August and rose 3.9% from a year earlier. Inflation tracked by the broader HICP rose 0.1% MoM and 3.4% YoY. Later in the session, ECB’s Lagarde is due to speak and the EurGroup meeting is expected to kick in.
Across the pond, August’s Producer Prices and Wholesale Inventories for the month of July will be the only releases.
What to look for around EUR
EUR/USD seems to have met dip buyers in the boundaries of the 1.1800 neighbourhood earlier in the week and manages to attempt a decent bounce to the 1.1840 so far on Friday, as investors continue to digest the recent ECB event. The pair remains supported by the persistent risk-on mood as well as alleviated concerns over the slowdown in the economic recovery.
Key events in the euro area this week: Final German CPI, EuroGroup meeting (Friday).
Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the Delta variant of the coronavirus and pace of the vaccination campaign. Probable political effervescence around the EU Recovery Fund. German elections in September could bring some political jitters to the scenario. Investors’ shift to European equities in the wake of the pandemic could lend extra oxygen to the single currency. ECB tapering speculations.
EUR/USD levels to watch
So far, spot is gaining 0.21% at 1.1849 and faces the next up barrier at 1.1909 (monthly high Sep.3) followed by 1.1941 (100-day SMA) and finally 1.2000 (psychological level). On the other hand, a break below 1.1802 (weekly low Sep.8) would target 1.1788 (20-day SMA) en route to 1.1663 (2021 low Aug.20).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.