- EUR/USD climbs to session tops beyond the 1.18 mark.
- Dollar weakness amidst risk-on mood dominate markets.
- Market chatter regarding extra stimulus underpins sentiment.
The European currency regains the smile at the end of the week and lifts EUR/USD back to the area of weekly highs around 1.1800.
EUR/USD challenges weekly highs around 1.18
Following Thursday’s inconclusive price action, EUR/USD has reclaimed ground lost and advances to the 1.1800 neighbourhood, where sit weekly peaks recorded on Tuesday.
The softer tone in the greenback keeps underpinning the improved sentiment in the risk complex. This trend has been exacerbated following the likelihood that discussions around another stimulus package could resume in the next days.
In the euro docket, Italian Industrial Production expanded at a monthly 7.7% during August, adding to the idea of a strong rebound in that economy. Across the pond, a poor calendar will only see August’s Wholesale Inventories along with the WASDE Report and the oil rig count by Baker Hughes.
What to look for around EUR
EUR/USD appears to have met a strong barrier in the 1.1800 area so far, where converge the 55-day SMA and above the immediate resistance line. The pair’s outlook 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 (which have been in turn supporting further the view of a strong economic recovery after the slump in the activity during the spring), the so far cautious stance from the ECB and the solid position of the EMU’s current account.
EUR/USD levels to watch
At the moment, the pair is gaining 0.36% at 1.1800 and a break above 1.1807 (weekly high Oct.6) would target 1.1917 (high Sep.10) en route to 1.1965 (monthly high Aug.18). On the flip side, the pair faces immediate contention at 1.1709 (38.2% Fibo of the 2017-2018 rally) seconded by 1.1612 (monthly low Sep.25) and finally 1.1495 (monthly high Mar.9).
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