Search ForexCrunch
  • EUR/USD trades with decent gains around 1.1840.
  • ECB-speak, EuroGroup meeting take centre stage on Friday.
  • US CPI for the month of August will be the salient event in the NA session.

EUR/USD keeps the multi-day recovery well and sound above the key barrier at 1.1800 the figure at the end of the week.

EUR/USD focused on ECB, US data

EUR/USD is up for the third consecutive session on Friday, extending the rebound from lows in the 1.1750 region recorded earlier in the week.

The pair managed to briefly surpass the key 1.19 barrier following the unexpected upbeat message from the ECB at its Thursday’s event, although the move up lacked follow through and motivated spot to return and close the session in the 1.1810/15 band.

It is worth recalling that the ECB said markets should not overreact to the recent appreciation of the single currency, although Lagarde later noted that the Council did discuss the move up in the exchange rate and said that the central bank will now monitor the exchange rate.

The central bank also revised a tad lower its forecasts for economic growth in the region for the next couple of years and now sees inflation advancing at a somewhat faster pace.

Later in the session, the focus of attention will be on several ECB speakers – Lagarde, De Guindos, Lane, Mersch and Schnabel – under the EuroGroup, ECOFIN events.

Across the pond, investors will closely follow the release of inflation figures measured by the CPI for the month of August.

What to look for around EUR

EUR/USD managed to test the area just above 1.20 the figure at the beginning of the month. However, bulls failed to extend the rally further north, sparking a leg lower to the sub-1.18 instead. Looking at the broader picture, the bearish view on the dollar continues to sustain the underlying constructive bias in the pair, all accompanied by the improved sentiment in the risk-associated universe, 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 a calmer US-China trade front. The solid positive stance in the speculative community also underpins the constructive outlook in the euro, while the recent tone from the ECB keeps the downside pressure somewhat limited.

EUR/USD levels to watch

At the moment, the pair is gaining 0.24% at 1.1843 and a breakout of 1.1965 (monthly high Aug.18) would target 1.2011 (2020 high Sep.1) en route to 1.2032 (23.6% Fibo of the 2017-2018 rally). On the flip side, immediate contention is located at 1.1751 (monthly low Sep.9) seconded by 1.1709 (38.2% Fibo of the 2017-2018 rally) and finally 1.1695 (monthly low Aug.3).