- EUR/USD stays firm and reaches levels last seen in October 2018.
- Some correction should not be ruled out due to overbought condition.
- ECB’s Lagarde, De Guindos next on the euro docket.
The buying pressure around the single currency gathers extra traction and now pushes EUR/USD to new tops in the 1.1580/85 band on Wednesday.
EUR/USD stronger on USD-weakness
EUR/USD is extending the recent breakout of the 1.15 barrier and is now targeting the 1.16 mark against the usual backdrop of the strong improvement in the risk complex and increasing selling pressure hitting the buck.
While the solid momentum around EUR/USD is seen well and sound for the time being, the current overbought conditions could spark some correction in the very near term. If occasional bouts of weakness do occur, these should be considered as corrective only.
Nothing scheduled in the euro docket today, although ECB’s Christine Lagarde will participate in a Washington Post Live event and Luis De Guindos will speak at an online annual US-EU Symposium. In the NA session, the House Price Index by the FHFA is due ahead of Existing Home Sales and the EIA’s report on crude oil supplies.
What to look for around EUR
EUR/USD recorded fresh 2020 highs in the vicinity of 1.16, always on the back of the persistent weakness surrounding the dollar. As always, upbeat risk appetite trends continue to support the momentum around the euro in combination with the current recovery in the euro zone. In addition, the recently clinched deal on the European Recovery Fund help to put political fears in the region to rest for the time being.
EUR/USD levels to watch
At the moment, the pair is gaining 0.35% at 1.1566 and a breakout of 1.1583 (2020 high Jul.22) would target 1.1600 (psychological level) en route to 1.1624 (monthly high Oct.1 2018). On the downside, the next support aligns at 1.1448 (50% Fibo of the 2017-2018 rally) seconded by 1.1422 (monthly high Jun.10) and finally 1.1168 (low Jun.19).