EUR/USD stays firm, meets resistance around 1.1870

EUR/USD keeps the buying bias unchanged around 1.1860.
Markets’ focus remains on potential stimulus talks.
ECB’s Luis De Guindos, Fed’s Beige Book next in the calendar.

Pablo Piovano FXStreet

Following earlier multi-week tops around 1.1870, EUR/USD has met some selling pressure and recedes to the 1.1850 zone in the wake of the opening bell in Wall St. on Wednesday.

EUR/USD stays vigilant on stimulus headlines

EUR/USD posts gains for the fourth consecutive session on Wednesday against the backdrop of the steady downtrend in the greenback.

Indeed, the dollar meets increasing selling pressure as the upcoming meeting between S.Mnuchin and N.Pelosi (at some point later on Wednesday) has reignited hopes of further fiscal stimulus.

Nothing scheduled data wise in Euroland, while ECB’s Luis De Guindos said earlier in the session that an early removal of current stimulus carries the potential to hurt the incipient recovery in the region and warned at the same time against financial risks stemming from mounting debt.

Earlier comments from FOMC’s L.Brainard did not help the dollar either after she suggested inflation is forecasted to remain low for the next few years while the US recovery is seen highly uncertain and uneven.

Later on Wednesday, De Guindos is due to speak again and board member Phillip Lane will participate in an online discussion panel.

What to look for around EUR

EUR/USD extends the bounce off last week’s lows in the 1.1690/85 band and already navigate in multi-week peaks well above 1.1800. The outlook on EUR/USD still remains constructive and bearish moves are deemed as corrective only. Further out, the positive bias in the euro remains underpinned by auspicious results from domestic fundamentals (despite momentum appears somewhat mitigated in several regions), the so far cautious stance from the ECB and the solid position of the EMU’s current account. In addition, the probable “blue wave” following the US elections is deemed as a negative driver for the greenback and carries the potential to lend extra legs to the pair in the longer run.

EUR/USD levels to watch

At the moment, the pair is gaining 0.31% at 1.1858 and a breakout of 1.1862 (monthly high Oct.21) would target 1.1917 (high Sep.10) en route to 1.1965 (monthly high Aug.18). On the other hand, the next support is located at 1.1688 (monthly low Ot.15) followed by 1.1612 (monthly low Sep.25) and finally 1.1495 (monthly high Mar.9).

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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