- EUR/USD has drifted up to the highest levels since 31st July on broad-based softness in the US dollar after Powell's speech on Friday.
- EUR/USD pops cloud base, 1.1780 is objective in clearing the cloud.
EUR/USD has drifted up to the highest levels since 31st July on broad-based softness in the US dollar after Powell's speech on Friday that knocked the DXY down from the 95.60s down to a low of 94.99 (94.80 is a line in the sand). EUR/USD subsequently rallied to 1.1639 from 1.1538 and the continuation candle has promoted an extension through the Ichimoku cloud base at 1.1658 and onto a high of 1.1680 in North American trade so far today.
- Trump and Mexican president sealing a deal to rename NAFTA, bring Canada in as well - (Trump has put China on hold)
Markets were thin with London away on Bank holidays and the euro is feeling the love considering how markets have morphed into risk-on with optimism around NAFTA and easier money supply in the aftermath of a dovish Powell. It is also month end and that usually supports a bid in EUR/GBP, (EUR/GBP strong on the day, its highest since September 2017), which underpins the euro in general.
EZ data strong
On the data front, the German IFO was above forecasts and rose from its weakest since Mar 2017 - (103.8 in July, f/c 101.9 in August. 101.2 is low for the series since 2016). German August IFO new Business Climate was a beat at 103.8 vs 101.9 forecasted and 101.7 previous. Current Conditions were 106.4, vs 105.4 forecast, 105.3 previous 105.4 revised while expectations were in at 101.2, vs 98.5 forecast, 98.2 previous.
EUR/USD levels
The technicals are indeed bullish with continuation candles on the daily sticks and while the rice remains above the 55-D MA around 1.1620. Having bust through the base of the cloud, eyes are on a test of the top of the cloud at 1.1752. The cloud is relatively thick so there could be strong resistance here. Daily RSI still has room to go until overbought territory. 1.1780 is objective in clearing the cloud as being the 8th July highs, slightly above the 100-D SMA located at 1.1770.
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