Following the previous recovery move above 1.1800, the EUR/USD pair has recently rallied around an intraday high of 1.1833 ahead of Fridays European session. Due to the recent positive risk appetite, this major currency pair is in reaction to the weakness of the US dollar.
On Friday, US President Joe Biden delivered a strategic six-part speech that kicked off the Asia session. Mood recently improved when Biden and Xi Jinping met for the first time in seven months.
The Chinese media reported, “Xi and Biden openly discussed the US-China relationship.” However, the negotiations seem less optimistic on the US side and are described as “broader strategic discussions.”
Biden‘s drive for vaccines and masks contributes to the positive sentiment in the vaccine market alongside the UK’s endorsement of booster doses of Covid vaccines.
Tapering is part of the Feds revitalization efforts and concerns about the Coronavirus. The willingness of Australia to annoy China by ending the port agreement is also challenging the dollar bears.
While the US Dollar Index (DXY), 92.48 at the time of publication, is down 0.04% for the second consecutive year, the yield on the 10-year US Treasury is 1.1 basis points (bps) after rising by 1.31%. At the latest, the US and European stock futures remain positive.
The European Central Bank (ECB) was prepared to adjust all instruments to ensure inflation stabilizes at 2% in the medium term. Today‘s consumer price inflation estimate in Germany could help. Euro traders should be aware of this. Moreover, as the bullish pair seeks confirmation of cautious bullish statements from the previous day, the ECB President’s comments, published around 9:30 am GMT, will be important.
A significant factor to watch is the USs producer price index (PPI) for August, which is 0.6% m/m instead of 1.0% as anticipated.
EUR/USD Price Technical Outlook: 20/50 SMAs Capping Gains
The EUR/USD price remains strongly supported by the 200-period SMA on the 4-hour chart. However, gains are primarily capped by the confluence of 20 and 50 SMAs. On breaking the confluence, the price may reach the 1.1900 level ahead of the double top at 1.1910. On the downside, 1.1800 and 200-period SMA will provide support ahead of 1.1770.
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