EUR/USD flirts with 3-week highs near 1.1880 ahead of data
- EUR/USD pushes higher and approaches the 1.1880 zone.
- The dollar drops in the wake of the FOMC event.
- German July advanced CPI due next in the calendar.
The recovery in the single currency stays well and sound for yet another session and now lifts EUR/USD to the key resistance area around 1.1880.
EUR/USD up on USD selling, looks to the docket
EUR/USD posts gains for the fourth consecutive session so far on Thursday, putting further distance from last week’s monthly lows in the mid-1.1700s.
Spot gathers extra steam in the second half of the week in response to the increasing selling pressure hitting the dollar, particularly after the Fed showed no rush to taper the bond-purchases programme and expressed no extra worries regarding inflation.
Earlier in the domestic docket, the German jobless rate dropped to 5.7% in July, while the Unemployment Change shrank by 91K. In the broader Euroland, the final print of the Consumer Confidence came in at -4.4 in July. Next on tap comes the flash German CPI for the current month.
Across the pond, the advanced Q2 GDP figures will take centre stage followed by Initial Claims and Pending Home Sales.
What to look for around EUR
The recovery in EUR/USD picks up extra pace and challenges the critical 1.1880/90 resistance band, always following the offered bias surrounding the greenback. In the meantime, dollar dynamics in response to the US economic recovery, the Fed’s dovish stance and prospects of high inflation are still expected to dictate the price action in the pair for the time being. On the euro side of the equation, the re-affirmed dovish stance from the ECB (as per its latest meeting) is expected to keep the upside limited in spot despite auspicious results from key fundamentals and the persistent high morale in the region.
Key events in the euro area this week: German labour market report/Advanced July CPI, EMU final Consumer Confidence (Thursday) – German, EMU flash Q2 GDP/EMU advanced July CPI (Friday).
Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the Delta variant of the coronavirus and pace of the vaccination campaign. Probable political effervescence around the EU Recovery Fund. German elections. Investors’ shift to European equities in the wake of the pandemic.
EUR/USD levels to watch
So far, spot is up 0.31% at 1.1879 and faces the next up barrier at 1.1895 (weekly high Jul.6) followed by 1.1975 (weekly high Jun.25) and finally 1.2004 (200-day SMA). On the other hand, a breakdown of 1.1751 (monthly low Jul.21) would target 1.1704 (2021 low Mar.31) en route to 1.1602 (November 2020 low).