EUR/USD flirts with daily tops beyond 1.1870, focus on FOMC

The single currency has regained buying interest on Wednesday and is now lifting EUR/USD back to the upper-1.1800s, or fresh daily peaks.

EUR/USD focused on data, FOMC

Following Tuesday’s pullback, EUR/USD has regained the upper hand and is resuming the uptrend on Wednesday on the back of the resumption of the offered bias around the greenback.

Indeed, bulls appear to have regained the upper hand in the middle of the week, always underpinned by the firm demand in the risk complex as well as rising hopes of the release of an effective COVID-19 vaccine in the short-term (ish).

In the euro docket, the trade surplus in the region climbed to €27.9 billion during July, surpassing estimates at the same time. Additionally in the euro area, ECB´s Board members Lane and Hakkarainien are due to speak. Across the pond, investors’ attention will be on the release of August’s Retail Sales, Business Inventories, MBA’s Mortgage Applications and the NAHB index.

Closing the session, the Federal Reserve will finish its 2-day monetary policy meeting. Consensus sees the Fed maintaining the current status quo, although the revised economic projections and further details on the already announced Average Inflation Targeting (AIT) scheme are expected to be on top of the debate.

What to look for around EUR

EUR/USD managed to test the area just above 1.20 the figure at the beginning of the month. The move, however, lacked follow through and triggered a corrective downside that met contention near 1.1750. Looking at the broader picture, the bearish view on the dollar continues to sustain the underlying constructive bias in the pair, all accompanied by the improved sentiment in the risk-associated universe, auspicious results from domestic fundamentals - which have been in turn supporting further the view of a strong economic recovery following the coronavirus crisis – as well as a calmer US-China trade front. The solid positive stance in the speculative community also underpins the constructive outlook in the euro, while the latest message from the ECB also collaborates with the momentum in the euro.

EUR/USD levels to watch

At the moment, the pair is gaining 0.18% at 1.1867 and a breakout of 1.1965 (monthly high Aug.18) would target 1.2011 (2020 high Sep.1) en route to 1.2032 (23.6% Fibo of the 2017-2018 rally). On the flip side, immediate contention is located at 1.1751 (monthly low Sep.9) seconded by 1.1709 (38.2% Fibo of the 2017-2018 rally) and finally 1.1695 (monthly low Aug.3).