- Mnuchin's comments have sparked trade optimism. Therefore, the EUR and risk assets will likely trade on the offensive against the greenback.
- Also supporting the bullish case in the EUR is the rally in the Chinese yuan - the fx market anchor.
- EUR/USD technical charts look constructive.
The EUR/USD pair could climb 1.16 if the equities remain bid and the Chinese yuan extends the ongoing rally.
The common currency picked up a bid at 1.1496 in Asia and rose to a high of 1.1528. Moreover, risk appetite improved after US Treasury Secretary Mnuchin said that China's Vice Premier Liu may visit Washington this month for higher-level trade negotiations.
This is evident from the drop in the USD/CNH (offshore yuan) to 5.5-month low of 6.7517 and the rally in the Asian stocks to one-month highs.
Notably, the uptick in yuan usually bodes well for other majors as the Chinese currency is widely considered an anchor for the FX markets. Further, the haven demand for the treasuries and the US dollar drops during the risk-on rally.
The EUR/USD, therefore, could extend the gains seen in Asia if trade optimism continues to push both the CNY and the equity markets higher.
The technical charts are also aligned in favor of the bulls. The currency pair closed well above 1.15 on Wednesday, confirming an upside break of the two-month-long trading range of 1.12-1.15. The 5- and 10-day moving averages (MAs) are trending north and the 14-day RSI is hovering well above 50.00.
What's more, risk reversals on the EUR, a gauge of calls to put, have nearly shed the bearish bias and could soon flip (turn positive) in favor of call options (bullish bets).
All-in-all, the path of least resistance is on the higher side. The only cause for concern is that gold's rally has stalled near $1,300. Moreover, the yellow metal is known to lead the FX markets. As a result, gold's inability to scale $1,300 could be considered a sign of impending corrective bounce in the US dollar.
EUR/USD Technical Levels
EUR/USD
Overview:
Today Last Price: 1.1524
Today Daily change: 26 pips
Today Daily change %: 0.226%
Today Daily Open: 1.1498
Trends:
Previous Daily SMA20: 1.1415
Previous Daily SMA50: 1.1383
Previous Daily SMA100: 1.1478
Previous Daily SMA200: 1.1631
Levels:
Previous Daily High: 1.1571
Previous Daily Low: 1.1485
Previous Weekly High: 1.1586
Previous Weekly Low: 1.1309
Previous Monthly High: 1.1486
Previous Monthly Low: 1.1269
Previous Daily Fibonacci 38.2%: 1.1518
Previous Daily Fibonacci 61.8%: 1.1538
Previous Daily Pivot Point S1: 1.1465
Previous Daily Pivot Point S2: 1.1431
Previous Daily Pivot Point S3: 1.1378
Previous Daily Pivot Point R1: 1.1552
Previous Daily Pivot Point R2: 1.1605
Previous Daily Pivot Point R3: 1.1638
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD could extend the recovery to 0.6500 and above
The enhanced risk appetite and the weakening of the Greenback enabled AUD/USD to build on the promising start to the week and trade closer to the key barrier at 0.6500 the figure ahead of key inflation figures in Australia.
EUR/USD now refocuses on the 200-day SMA
EUR/USD extended its positive momentum and rose above the 1.0700 yardstick, driven by the intense PMI-led retracement in the US Dollar as well as a prevailing risk-friendly environment in the FX universe.
Gold struggles around $2,325 despite broad US Dollar’s weakness
Gold reversed its direction and rose to the $2,320 area, erasing a large portion of its daily losses in the process. The benchmark 10-year US Treasury bond yield stays in the red below 4.6% following the weak US PMI data and supports XAU/USD.
Bitcoin price makes run for previous cycle highs as Morgan Stanley pushes BTC ETF exposure
Bitcoin (BTC) price strength continues to grow, three days after the fourth halving. Optimism continues to abound in the market as Bitcoiners envision a reclamation of previous cycle highs.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Federal Reserve might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.