EUR/USD moves to a session high of 1.1874
Dollar weakness is partially the story here but the euro is keeping up with gains seen in commodity currencies so far on the session, amid the more upbeat tone in US futures with S&P 500 futures up ~0.9% and Nasdaq futures up ~1.3%.
Besides ECB chief economist Philip Lane, other ECB policymakers have pretty much echoed a similar tone to Lagarde’s remarks yesterday i.e. they are not particularly concerned by the euro’s recent strengthening.
Or at least they are hinting that there is no need to be ‘overreacting’ despite the euro area observing a record low core inflation in August.
That is in part helping to see EUR/USD keep higher on the session as buyers break above the 200-hour MA (blue line), establishing a more bullish near-term bias.
The 1.1900 level will be the next key near-term resistance to watch, before getting to the 61.8 retracement level and the high yesterday at the 1.1912-17 region.
Looking ahead, dollar sentiment will also matter quite a bit – similar to yesterday – and while US futures are pointing to more upside for now, some caution should be heeded as risk sentiment is arguably still looking rather fragile at this point in time.
If stocks falter once again following a brighter start, I fear we could start to lurk towards the Tuesday lows and things could turn a bit ugly before the weekend.
In the event of such a turnaround, that should help with dollar sentiment but we’ll see.