EUR / USD flirts with 3-day highs near 1.1870

• The EUR / USD retests the key resistance around 1.1870.
• The dollar remains on the defensive in the face of strong risk appetite.
• The Fed publishes its Monetary Policy Report later in the session.

Buying pressure in the European currency remains good and solid and is now pushing the EUR/USD back to the 1.1870 region, or 3-day highs.

EUR / USD extends bounce from 1.1780 level

EUR / USD adds to the optimism seen in the second half of the week and is now gaining around a penny from new lows in the 1.1780 region (Wednesday / Thursday) to the current 1.1870 region.

The pair gained new buying interest due to the weakness of the dollar, which in turn is underpinned by investors’ preference for riskier assets.

With no relevant posts on the euro agenda, the widely anticipated results of the ECB’s strategy review (Thursday), and nothing new from Lagarde in her speech on Friday, the focus was on the ECB’s accounts from the June meeting.

In fact, many members favored the reduction of the asset purchase program in light of the improvement in the outlook for growth and inflation. Regarding the latter, long-term inflation expectations remain moderate in the opinion of the affiliates, while they highlighted the importance of looking through the transitory increases in consumer prices.

The accounts also noted that higher market rates could translate into tighter financing conditions.

What to look for around EUR

The strong recent EUR / USD retracement appears to have found decent containment around 1.1780 for the time being. Meanwhile, price action around the pair is expected to exclusively follow dollar dynamics, particularly after the last FOMC meeting supported prospects for higher inflation and a possible reduction earlier than expected. In addition, support for the European currency comes in the form of auspicious results from fundamentals on the block along with higher morale, a strong rebound in economic activity and investor appetite for riskier assets.

Technical levels

So far, the pair is gaining 0.19% at 1.1865 and is facing the next bullish barrier at 1.1895 (weekly high on July 6) followed by 1.1975 (weekly high on June 25) and finally 1.2000 (200-day SMA). . On the other hand, a break of 1.1781 (monthly low on July 7) would target 1.1762 (78.6% Fibonacci from the November-January rally) and would head to 1.1704 (March 31 low).