Euro/dollar is trading above the 50, 10, and 200 Simple Moving Averages on the four-hour chart and is benefiting from upside momentum. Bulls are in the driver's seat.
Some resistance awaits at 1.1395, the daily high, followed by 1.1425, which was June's high. The next level to watch is 1.1452, the recent peak.
Support awaits at 1.1373, the daily low, followed by 1.1345, which was a high point last week and also where the 50 SMA hits the price. The next levels are 1.13 and 1.1260.
I'm not a bad guy, I just to see reforms – the words of Mark Rutte, Prime Minister of the Netherlands, as he entered the EU Summit. The Dutch PM also added that he sees a less than 50% chance of a deal this weekend, lowering already depressed expectations.
Rutte is the unofficial leader of the "Frugal Four" – a group that also consists of Austria, Denmark, and Sweden, who object to the EU Commission's recovery fund's basic principles that are backed by all other countries, including Germany. The four rich nations are reluctant to sign off on a plan which includes mutually funded grants worth €500 billion
On the other side of the fence, Italy is pleading to agree on a deal as soon as possible. The eurozone's third-largest economy had already struggled to grow before the coronavirus crisis and was hit hard. Emotions are rising high with Rome feeling abandoned by the EU in the early days of the pandemic.
Christine Lagarde, President of the European Central Bank, also urged leaders to agree on a much-needed fiscal package to compound her institution's efforts. The ECB left its policy measures unchanged and reiterated its commitment to do what is necessary. Lagarde previously cast doubts that leaders will shake hands – or press elbows – on a deal.
A lower bar is easier to cross – the euro has potential to rise if the first face-to-face talks will result in any kind of agreement. While the devil may be in the details, it seems that investors will buy any agreement which consists of a substantial boost.
While the common currency may find it easy to rise, EUR/USD may struggle with dollar strength. The safe-haven greenback has seen some demand as markets seem to see the glass half empty. US retail sales leaped by 7.5% in June – smashing expectations for a 5% increase and topping the level recorded in June 2019.
See US Data Analysis: Reopening is a double-edged sword, S&P 500 bulls have reasons to worry
However, this V-shaped recovery in consumption was somewhat overshadowed by stubbornly high jobless claims, which stood at 1.3 million in the week ending July 10. Moreover, US coronavirus cases broke the daily record. Again. They hit 75,000 and the mortalities neared 1,000.
Source: New York Times
A more up-to-date look at the state of the American shopper awaits traders on Friday. The University of Michigan's preliminary Consumer Sentiment figure is set to edge up to 79 points, yet it is vulnerable to the increase in cases.
Overall, there is room to see the euro rise but the dollar demand may steal the show.
Reprinted from fxstreet.com, the copyright all reserved by the original author.
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