During the Friday's Asian trading session, the EUR/USD currency pair succeeded to extend its previous day winning streak and hit the intra-day high of 1.1887 level mainly due to the broad-based U.S. dollar weakness, triggered by Fed's new monetary policy strategy (Average Inflation Targeting) that will result in prolonged low-interest.
The risk-on market sentiment, backed by the combination of factors, also stops the U.S. dollar from putting any safe-haven bids and contributing to the currency pair gains. On the contrary, the buying interest around the shared currency rather unaffected by the intensifying virus fugues in Europe. At the moment, the EUR/USD currency pair is currently trading at 1.1896 and consolidating in the range between the 1.1811 - 1.1896 and moving on, the second day of speeches from the Jackson Hole and second-tier data from the U.S.
As we already mentioned that the Federal Reserve Chairman Jerome Powell preferred Average Inflation Targeting (AIT) and cited a bit longer life of the easy money policies. The U.S. Federal Reserve Chairman Jerome Powell announced while speaking at Jackson Hole symposium that the Fed would target an average inflation rate of 2%, combatting years of super-low inflation. This, in turn, keeping the U.S. dollar under pressure and extended support to the currency pair.
Across the ocean, the reason for the upbeat trading sentiment could be associated with the talks concerning the U.S. coronavirus (COVID-19) stimulus package. Let me tell you that the U.S. House Speaker Nancy Pelosi recently fueled hopes over the U.S. coronavirus (COVID-19) stimulus package while saying that the Democratic showed a readiness to easing their demand on the virus package total.
However, the risk sentiment was further bolstered by the reports that suggest the struggles of global leaders to prepare the COVID-19 vaccine first. The receding number of virus cases in most of the countries also keeps the risk-on sentiment on the table. However, the positive trading sentiment also weighed the U.S. dollar.
At the USD front, the broad-based U.S. dollar failed to extend its previous gaining streak and dopped on the day after Federal Reserve's latest decision. Moreover, the losses in the U.S. dollar could also be associated with the downbeat U.S. job data, which showed that 1.006 million initial jobless claims were filed over the past week. This, in turn, fueled worries about the U.S. labor market recovery. However, the losses in the U.S. dollar kept the EUR/USD currency pair well bid. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies dropped by 0.20% to 92.802 by 12:24 AM ET (5:24 GMT).
At the coronavirus front, the number of coronavirus cases increased to 239,507, while the total number of deaths reached 9,288 figures. Whereas, the cases grew by 1,576 in Germany on the day while the death toll increased by three as per the German disease and epidemic control center, Robert Koch Institute (RKI) report. Let me tell you further about it, the total active cases all over the country increased to around 17,020, the highest number since May 10. Considering the worsening situation of the virus in Europe, Germany announced a ban on large events until the end of this year. Despite this, the market traders did not give any major attention and stayed well bid around 1.1880 level.
Looking forward, the second 2 of Jackson Hole Symposium and the usual risk catalysts will be key to watch on the day. The currency pair will also take fresh clues from the Euro one business and investor sentiment indices, which are scheduled for release at 09:00 GMT. Apart from this, the continuous drama surrounding the US-China relations and updates about the U.S. stimulus package will closely be followed. In the meantime, the USD moves and coronavirus headlines could not lose their importance.
Daily Support and Resistance
S1 1.1678
S2 1.1744
S3 1.1769
Pivot Point 1.1809
R1 1.1834
R2 1.1875
R3 1.194
The EUR/USD is trading in a tight trading range of 1.1885 to 1.1900 level. The EUR/USD pair is likely to gain support at 1.1830, while a downward breakout of the 1.1830 mark can trigger selling unto 1.1800 level. In the event of an upward disruption, the EUR/USD pair may trigger further buying trends until 1.1880 and 1.1945 levels. Good luck!