- EUR/USD moves higher and challenges the 1.1870 region.
- Risk appetite leans towards the riskier assets on Monday.
- US NAHB index surprised to the upside at 78 in August.
The buying interest around the European currency remains well and sound at the beginning of the week, lifting EUR/USD to the key hurdle near 1.1870.
EUR/USD faces strong resistance near 1.1880
EUR/USD is posting gains for the fifth consecutive session on Monday, prolonging the bounce of last week’s lows in the 1.1700 neighbourhood.
As usual, the persistent weakness in the greenback keeps sustaining the upside momentum in the pair. However, a tough barrier is seen around 1.1880, considered as well as the latest defence for a visit to YTD peaks near 1.1920 (August 6).
Markets’ attention remains fixed on the US political arena, where another fiscal stimulus package still waits to be discussed by US lawmakers. However, recent auspicious data releases in the US economy appear to have poured some cold water over expectations of a deal, at least in the very near-term.
In the docket, the US NAHB index came in at 78 for the current month, exceeding expectations, while the Empire State Index surprised to the downside at 3.70 for the same period.
What to look for around EUR
EUR/USD pushed higher and recorded new highs near 1.1920 earlier in the month, subsequently sparking a corrective downside that met solid contention in the 1.17 region for the time being. The July-August rally, while largely triggered by broad-based dollar-selling and improved sentiment in the risk-associated universe, found extra sustain in auspicious results from domestic fundamentals, which have been in turn supporting further the view of a strong economic recovery following the coronavirus crisis. Also lending wings to the momentum around the euro appear the deal on the European Recovery Fund – which helped putting political fears within the bloc to rest (for now) – and the solid position of the current account in the region.
EUR/USD levels to watch
At the moment, the pair is gaining 0.23% at 1.1867 and a breakout of 1.1916 (2020 high Aug.6) would target 1.1996 (high May 14 2018) en route to 1.2032 (23.6% Fibo of the 2017-2018 rally). On the flip side, initial contention is seen at 1.1695 (monthly low Aug.3) followed by 1.1495 (monthly high Mar.9) and finally 1.1448 (50% Fibo of the 2017-2018 rally).