EUR/USD clinches fresh monthly highs above 1.1150

EUR/USD moves higher and test 1.1150/55 band.
Persistent USD-weakness behind the move in spot.
Markets’ focus stays on the Brexit deal vote on Saturday.

Pablo Piovano FXStreet

The upside momentum around the single currency remains unabated so far this week and is now pushing EUR/USD to fresh 2-month tops in the 1.1150/55 band.

EUR/USD boosted by USD-selling

The rally in the pair is closing the third week with gains so far, managing to extend the up move further north of the key barrier at 1.11 the figure and shifting its focus to late August’s peak at 1.1163.

The disappointing performance of the Greenback in past weeks in combination with absent bad news from Euroland and rising optimism pre and post Brexit deal have all undermined the sentiment around the Dollar, relegating DXY to fresh 2-month lows in the 97.40 region.

Looking ahead, investors are expected to remain wary of the Brexit deal vote in the UK Parliament on Saturday. Next week will be a key one for the single currency, as preliminary PMIs in Core Euroland are due ahead of the ECB event.

What to look for around EUR

The upside momentum in the pair has extended further north of the critical 1.1100 handle against the backdrop of a weaker buck and optimism from the recently clinched Brexit deal. However, it is worth recalling that the positive 3-week streak in spot has been exclusively sponsored by the renewed offered bias in the Dollar and that the outlook in Euroland continues to deteriorate and does nothing but justify the ‘looser for longer’ monetary stance by the ECB and the bearish view on the single currency in the longer run. In addition, the possibility that the German economy could slip into recession in Q3 remains a palpable risk for the outlook and is expected to weigh further on EUR.

EUR/USD levels to watch

At the moment, the pair is gaining 0.18% at 1.1144 and faces the next barrier at 1.1152 (monthly high Oct.18) seconded by 1.1163 (high Aug.26) and finally 1.1186 (61.8% Fibo of the 2017-2018 rally). On the flip side, a break below 1.1050 (21-day SMA) would target 1.0994 (21-day SMA) en route to 1.0879 (2019 low Oct.1).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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