- EUR/USD records fresh weekly highs near 1.1920.
- The renewed dollar weakness is fuelling the upside in the pair.
- EMU’s Consumer Confidence came in at -14.7 in August.
The buying pressure around the single currency is gathering extra pace at the end of the week and is now lifting EUR/USD to fresh multi-day peaks beyond 1.19 the figure.
EUR/USD up on USD-selling
EUR/USD has climbed to weekly tops near the 1.1920 level, at the same time leaving behind Thursday’s post-Powell peaks just above the 1.19 mark.
The increasing selling bias surrounding the buck is gathering further traction on Friday as market participants continue to adjust to the recent announcements from Chief Powell.
In fact, at his speech at the Jackson Hole Symposium on Thursday, Jerome Powell announced the Fed will now set an inflation target at 2% in average, although he did not unveil any further details on this issue. Therefore, the Federal Reserve will now allow consumer prices to run above the 2% goal for “some time” (again, no specifics on this).
This shift in the Fed’s view is supporting the view that the central bank will now keep the ‘lower for longer’ stance unchanged for several years and is directly impacting on the buck.
In the calendar, the final Consumer Confidence gauge in the euro bloc tracked by the European Commission (EC) came in at -14.7 for the current month, a tad better than the -15.0 previous. Across the pond, inflation figures measured by the PCE, Personal Income/Spending, the Chicago PMI and the final U-Mich print will keep the dollar under the microscope.
What to look for around EUR
EUR/USD broke above the multi-day consolidative range and is looking to consolidate the recent breakout of the 1.19 barrier. The July-August rally, while largely triggered by broad-based dollar-selling and improved sentiment in the risk-associated universe, found extra sustain in 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 US-China trade headlines. Also lending wings to the momentum around the euro appear the deal on the European Recovery Fund – which helped putting political fears within the bloc to rest (for now) – and the solid position of the current account in the region.
EUR/USD levels to watch
At the moment, the pair is up 0.82% at 1.1918 and a move above 1.1965 (2020 high Aug.18) would target 1.1996 (high May 14 2018) en route to 1.2032 (23.6% Fibo of the 2017-2018 rally). On the other hand, the next support is located at 1.1772 (weekly low Aug.26) seconded by 1.1754 (weekly low Aug.21) and finally 1.1695 (monthly low Aug.3).
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