EUR/USD headed to 1.2000 amid EZ economic and political optimism

Sentiment lifted by the German Ifo sentiment data.
Will DXY sustain the recovery?
German politics and Fedspeaks in focus.

Dhwani Mehta FXStreet

The EUR bulls took a breather in Asia, leaving the EUR/USD pair in a consolidative mode near two-month tops of 1.1944, as focus shifts towards the Eurozone flash CPI estimate, US growth numbers and Fedspeaks due on the cards later this week for fresh trading impetus.

EUR/USD: Risks minor correction before further upside?

The sentiment around the Euro remains buoyed by the optimism over the Eurozone growth story, especially, after last week’s solid flash manufacturing PMI reports and the German business climate numbers for November.

Moreover, easing political worries surrounding the German political climate, after Merkel’s conservative party agreed on Sunday to pursue a “grand coalition” with the SPD, will also remain EUR-supportive in the week ahead.

Meanwhile, the major also benefits from the ongoing broad USD weakness, as the Treasury yield curve flattening continues with 10 yr-2yr spread at 59 basis points, the lowest since Oct. 2007.

Attention now turns towards the US new home sales data and FOMC member Kashkari’s speech due later today, as markets gear up for a data-heavy calendar this week.

EUR/USD Technical Levels

According to Omkar Godbole, Analyst at FXStreet, “The one-month 25 delta risk reversals gauge rose to a 4-month high of 0.45 on Friday, suggesting increased demand for the EUR calls. It adds credence to the bullish technical breakout on the charts and could yield a move to 1.20 or 1.2092."

Valeria Bednarik, Chief Analyst at FXStreet, explained, “according to the 4 hours chart, the pair is also bullish, despite technical indicators lost upward strength in extreme overbought territory, as the price ended some 15 pips below its high. In this last time frame, the 20 SMA has turned north almost vertically, now around 1.1830, also a strong static support level. Should the advance extend beyond the mentioned high, the pair has room to extend its gains towards the 1.2000 regions, en route to the high of 2015 and this 2017 at 1.2100. Support levels: 1.1890 1.1860 1.1825. Resistance levels: 1.1945 1.1980 1.2015.”

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

GBP/USD hits multi-week tops around 1.3560

GBP/USD gathers fresh steam and advances to new three-month peaks near the 1.3560 zone on Friday. Cable’s sharp move higher comes after three daily drops in a row and follows the increasing selling pressure hurting the Greenback.

EUR/USD pops to fresh two-month highs, targets 1.1600

EUR/USD advances markedly, revisiting the upper 1.1500s for the first time since mid-June. The pair’s sharp uptick comes on the back of a strong retracement in the US Dollar amid BoJ intervention chatter and despite steady uncertainty in the Middle East.

Gold picks up pace, approaches $4,400

Gold rebounds toward the $4,400 mark per troy ounce on Friday, reversing the previous day’s pullback. The precious metal’s recovery comes as fresh and intense weakness keep weighing on the US Dollar, while traders keep assessing easing expectations of an imminent Fed interest rate hike and the situation from the Middle East.

Pi Network Price Forecast: PI extends consolidation as bulls eye $0.10

Pi Network (PI) price holds steady on Friday, maintaining a consolidating tone for three consecutive days. Mild retail strength in the PI token remains stable, with Open Interest above $9 million, while social buzz eases. PI token’s technical outlook is mixed, as bearish momentum wanes to neutral, with bulls eyeing the $0.1000 psychological level.

Weekly focus: Some relief in US inflation concerns

Actual inflation data for July came out as expected with a 0.1% m/m increase in headline CPI and 0.2% excluding food and energy. Annual headline inflation remains too high at 3.4% and means that wage earners are experiencing stagnating spending power at best, and core inflation is a bit higher than the inflation target of two percent would suggest.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.