EUR/USD flirts with 2-day highs near 1.1870 ahead of EMU data

• EUR/USD adds to Friday’s advance and reaches the 1.1870 region.
• Risk-on sentiment keeps propping up the mood in the pair.
• EMU’s Industrial Production coming up next on the docket.
• Markets’ focus remains on the FOMC event on Wednesday.

EUR/USD is prolonging the upbeat tone at the beginning of the week and trades close to the 1.1870 level, or 2-day highs.

EUR/USD up on prevailing risk-on mood

EUR/USD advances for the fourth consecutive session so far on Monday, keeping the buying bias unchanged despite the failed attempt to extend Thursday’s move further north of the 1.19 mark.

The single currency stays bid amidst the renewed selling bias in the greenback, while market participants continue to adjust to the latest ECB event on Thursday. It is worth recalling that the central bank talked down the recent appreciation of the exchange rate and kept a positive view on the recovery in the region.

Later in the calendar, July’s Industrial Production in the euro area is due ahead of the speech by ECB’s P.Lane.

What to look for around EUR

EUR/USD managed to test the area just above 1.20 the figure at the beginning of the month. The move, however, lacked of follow and triggered a corrective downside that met contention near 1.1750. Looking at the broader picture, the bearish view on the dollar continues to sustain the underlying constructive bias in the pair, all accompanied by the improved sentiment in the risk-associated universe, auspicious results from domestic fundamentals - which have been in turn supporting further the view of a strong economic recovery following the coronavirus crisis – as well as a calmer US-China trade front. The solid positive stance in the speculative community also underpins the constructive outlook in the euro, while the latest message from the ECB keeps the downside pressure somewhat limited.

EUR/USD levels to watch

At the moment, the pair is gaining 0.17% at 1.1863 and a breakout of 1.1965 (monthly high Aug.18) would target 1.2011 (2020 high Sep.1) en route to 1.2032 (23.6% Fibo of the 2017-2018 rally). On the flip side, immediate contention is located at 1.1751 (monthly low Sep.9) seconded by 1.1709 (38.2% Fibo of the 2017-2018 rally) and finally 1.1695 (monthly low Aug.3).