EUR/USD has rallied about 5.5% this month, which is the largest month over month gain since September 2010. The pair now faces resistance from its 100-month moving average, an indicator it has not tested since early 2018.
Both the British pound and the single currency show similar gains and are the top performers among the majors while the dollar has been the weakest.
Over the past 15 sessions, EUR/USD has rallied in 13 of them.
The pair was initially boosted by progress in a new European stimulus program. A persistently weaker dollar has also been a big driver. The greenback has been steadily offered through the month as risk appetite among investors has been strong.
Economic data from Europe was mixed today. The contraction in GDP for France and Italy was less than expected in the second quarter. The Spanish economy, on the other hand, contracted more than analysts were estimating.
GDP for the euro area as a whole was reported to contract 12.1% which is a tick more than the forecast. Annual inflation in the euro area rose to 0.4% from 0.3% and against the forecast for a rise of 0.3%.
The 100-month average is considered a major hurdle for the currency pair and it may cap gains going into the monthly close.
Upward momentum remains prevalent although has slowed somewhat in the second half of the week.
In addition to the overhead resistance in the currency pair, The inversely correlated dollar index (DXY) is bouncing off a major support level.
DXY reached a low earlier today near a level that acted as resistance back in early 2006. This same area also provided support from the middle of 2015 until the start of 2018.
Considering that the movements in EUR/USD and the dollar in general are stretched by any measure, the technical area mentioned could trigger a dollar bounce.
- EUR/USD reached fresh 2-year highs above 1.1900 earlier in the day.
- GDP data from the US released yesterday showed a contraction of 32.9% in the second quarter which was slightly better than expected.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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