EUR/USD is attempting to post a sixth straight week of gains and has advanced in 11 out of the last 12 days. The pair is boosted by a weaker dollar and positive economic data from Europe.
An agreement reached earlier this month on a 750 billion euro stimulus plan offered a catalyst for the surge higher in the single currency and recent economic data has shown an improvement in the euro area economy.
PMI data from last week signaled that both the manufacturing and services sectors have pushed back into expansion after a steep contraction in the first few months of the second quarter.
The US is looking to follow suit with a proposal on Monday for a stimulus package worth about $1 trillion. As part of the package, Senate Republicans plan to issue another round of $1200 stimulus checks while cutting the emergency unemployment benefits from $600 to $200 per week.
Extreme volatility was seen earlier today in some markets as gold prices spiked to all-time highs around $1980 before paring back the over 2% gain. Volatility is also emerging in the cryptocurrency markets with an early day surge in Bitcoin to levels not seen since August last year.
The volatility seen in the early day in other markets might be an early sign of a near-term top in EUR/USD, although considering the recent upward momentum, trying to pick a top in the pair is not a wise idea.
The level to watch in the session ahead is 1.1700 as it influenced the exchange rate in prior years. If buyers defend it, the pair could make another run at the 1.1800 level.
There could be a slowing of volatility as the Federal Reserve starts its two-day meeting.
The trade-weighted US dollar index declined to fresh two-year lows earlier in the day but is seen attempting to recover. At this stage, the recovery has not translated into anything meaningful. Considering the broader trend, sellers are likely to see the bounce as an opportunity to establish fresh positions.
- EUR/USD has eased back towards the 1.1700 level after touching a high of 1.1781 in the early day.
- The US is working on a stimulus package expected to be worth around $1 trillion.
- The Fed starts its two-day meeting and will announce its decision and hold a press conference tomorrow.
For a look at all of today’s economic events, check out our economic calendar.