- EUR / USD posts new weekly highs near 1.1920.
- Renewed dollar weakness is fueling the pair’s rise.
- EMU consumer confidence stood at -14.7 in August.
Buying pressure around the single currency picks up at the end of the week and is now on the rise EUR / USD to several-day cool peaks above 1.19 the figure.
EUR / USD up on USD sell
EUR / USD climbed to weekly highs near the 1.1920 level, leaving behind Thursday’s post-Powell highs just above the 1.19 mark.
The growing selling bias surrounding the dollar strengthened on Friday as market participants continue to adjust to recent announcements from Chief Powell.
Indeed, during his speech at the Jackson Hole Symposium Thursday, Jerome Powell announced that the Fed would now set an inflation target of 2% on average, without however revealing more details on this issue. As a result, the Federal Reserve will now allow consumer prices to exceed the 2% target for “a while” (again, no details on this).
This change in view by the Fed confirms the idea that the central bank will now hold the “lower for longer” position unchanged for several years and has a direct impact on the dollar.
In the calendar, the final gauge of consumer confidence in the euro bloc followed by the European Commission (EC) came in at -14.7 for the current month, a little better than the previous -15.0. Across the pond, inflation numbers as measured by PCE, Personal Income / Expense, Chicago PMI, and U-Mich’s final print will keep the dollar under the microscope.
What to look for around the EUR
EUR / USD has crossed the multi-day consolidation range and is looking to consolidate the recent breakout of the 1.19 barrier. The July-August rally, though largely triggered by a widespread sell-off in dollars and improving sentiment in the risk universe, found further support in the auspicious results of domestic fundamentals – which in turn have further supported the prospect of a strong economic recovery from the coronavirus crisis – as well as US-China trade headlines. The deal on the European Stimulus Fund – which has helped allay political fears within the bloc (so far) – and the region’s strong current account position, also lend wings to the momentum around the euro.
EUR / USD levels to watch
For now the pair is up 0.82% to 1.1918 and a move above 1.1965 (Aug 18, 2020 high) would target 1.1996 (May 14, 2018 high) on the way. around 1.2032 (23.6% Fibo of the 2017-2018 rally). On the other hand, the next support is at 1.1772 (August 26 weekly low), seconded by 1.1754 (August 21 weekly low) and finally at 1.1695 (August 3 monthly low).