EUR/USD has continued to rally strongly above the 1.1800 level on Tuesday, showing bullish strength. Traders are closely tracking the action on this currency pair. The duo now sits lame just under that 2025 pinnacle of 1.1830, which was reached on July 1st. The US Dollar (USD) continues to be bombarded by sellers. This upward swig of momentum comes a day before the pivotal monetary policy meeting of the US Federal Reserve (Fed) kicks off on Wednesday.
Today’s economic news from the Eurozone indicates that Industrial Production was up a trifling 0.5%. On a month-on-month basis, it increased by 0.3% in July. In addition, the year-over-year Industrial Production reading came in pretty good too, rising 1.8%, above expectations of 1.7%. Bullish sentiment in EUR/USD finds support in the data. It nevertheless reflects a positive bias and is on its way to test the six-month high of 1.1830 set on …
On the other side of the Atlantic, the USD was under pressure. Investors were looking ahead to today’s release of United States Retail Sales data. Expectations for this report have produced a euphoric mood for EUR/USD. For this reason, the currency pair is impressively remaining above the 1.1800 mark before the announcement. US Retail Sales exploded by 0.6% in August, blowing past forecasts of 0.2% by a wide margin. Yet as great as this performance has been, it loosens the outlook for the USD considerably.
Germany kicked-off the string with its ZEW Survey on Economic Sentiment, showing an increase in September. The index jumped to 37.3, an increase from the previous reading of 34.7. This higher number is an expression of heightened confidence among German investors and business analysts in the direction of the German economy. Evaluation of the current situation in Germany is at an all-time low. It has sunk to -76.4, down from -68.6 in August. Even as European economic data sent some conflicting signals, EUR/USD pressed higher, showing robust buyer conviction.
EUR/USD still has a bullish outlook on technical indicators. The 20-day Simple Moving Average (SMA) has raced to the upside and currently rests close to 1.1740. This is just the latest sign that buyers continue to dictate this competitive housing market. The four-hour chart Momentum indicator remains firmly above the 100 line. Its steep incline indicates bullish momentum with strong potential for continued upside. The RSI (Relative Strength Index) indicator is a sign of this optimism pushing up towards 72 north.
Traders are focused on the future with laser-like intensity. They are particularly tracking the economic fundamentals and central bank policy decisions that might shift market dynamics. The next Fed meeting is already looking very important. Perhaps most importantly, it will provide guidance as to the next changes to monetary policy which are likely to shape both the USD and overall market direction.