The EUR/USD managed to gains positive traction and edged higher around the 1.1900 level mainly due to the broad-based US dollar. Thus, the broad-based US dollar weakness could be associated with the market risk-on mood, which was supported by the renewed optimism over a possible vaccine for the highly infectious coronavirus disease. Apart from this, the doubts over the US fiscal stimulus measures and upbeat China data also weighed on the broad-based US dollar, which keeps the EUR/USD currency pair higher closer to 1.1900 marks.
Across the pond, the firm note from the ECB at last week’s meeting boosted the positive tone around the shared currency, which also pushed the current par higher near the 1.1900 neighborhood, or new 3-day highs. Meanwhile, the positive stance in the speculative community also underpinned the constructive outlook in the shared currency and contributed to the currency pair gains. On the contrary, the rise in coronavirus infections across Europe becomes the key factor that kept the pressure on further gains in the pair. At the moment, the EUR/USD is trading at 1.1886 and consolidating in the range between the 1.1860 – 1.1900. Moving on, the currency pair traders seem cautious to place any strong position ahead of the German Zew survey and Eurozone Labor Cost data.
The shared currency Euro could face some selling pressures if Labor Costs’ growth slows more than expected, reviving disinflation fear. However, the Eurozone’s inflation turned negative in August, the official data on Sept. 1 showed. It worth recalling that the market focus would be on the Eurozone and German Zew Survey numbers, Eurozone Labor Cost (Q2), which is scheduled to release at 09:00 GMT.
Across the ocean, the market trading sentiment remained well supported by the positive progress on a potential vaccine for the highly contagious coronavirus disease. These hopes were triggered after the Chinese CDC chief biosafety expert confirmed that the Ordinary Chinese could take the COVID19 vaccine as early as November or December as the phase III clinical trial went very smoothly. Meanwhile, the Pfizer’s Pharmaceutical company also joins the on-going optimism while saying that we will likely provide the pandemic’s cure during this year to the US.
Apart from this, the upbeat Chinese macro numbers also exerted a positive impact on market trading sentiment. At the data front, China’s August Retail Sales YoY, the number came in at 0.5% versus. 0% exp and -1.1% last, with Industrial Output YoY at +5.6% and +5.1% exp and +4.8% last. In the meantime, the Fixed Asset Investment YoY unchanged at -0.3% vs. -0.4% expected and -1.6% last. At the same time, China’s January-August Private Sector Fixed Asst Investment dropped by 2.8% YoY.
The greenback failed to extend positive traction and remained bearish on the day. Moreover, the losses in the US dollar could also be attributed to the doubts over the US fiscal stimulus measures. The probabilities for a large stimulus have fallen approximately to zero after Democratic voted to block a Republican bill that would have provided around $300 billion in new coronavirus aid. However, the losses in the US dollar kept the EUR/USD currency pair higher. Whereas, the US dollar index dropped to 93.029, slipping further from a one-month high of 93.664 touched last Wednesday, with its low last week of 92.695 seen as immediate support.
Moving on, the traders will keep their eyes on the Eurozone and German Zew Survey numbers, Eurozone Labor Cost (Q2), scheduled for release at 09:00 GMT. The data will influence the shared currency. Meanwhile, the updates surrounding the Brexit, virus, and US-China tussle could not lose its importance.
The EURUSD pair has violated the double top resistance level of 1.1885 level, and now it’s trading at 1.1895 level. For now, the EUR/USD may find support at 1.1885 level, and above this, a continuation of a bullish trend may lead EUR/USD price until the 1.1916 level. Bearish correction can be seen until 1.1885 and 1.1870 before the continuation of further buying trends in the EUR/USD.
Entry Price – Buy 1.18896
Stop Loss – 1.18496
Take Profit – 1.19296
Risk to Reward – 1:1
Profit & Loss Per Standard Lot = -$400/ +$400
Profit & Loss Per Micro Lot = -$40/ +$40
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