EUR/USD Fills 2015 Gap, Bull-Flag Continues To Unfold Ahead Of ECB

Ticker

Last

High

Low

Daily Change (pip)

Daily Range (pip)

EUR/USD

1.2016

1.2070

1.1956

114

EUR/USD may continue to appreciate ahead of the European Central Bank (ECB) meeting on September 7 as the pair finally fills the January-2015 (1.2000 down to 1.1955).

The U.S. dollar remains under pressure following the Kansas City Fed Economic Symposium in Jackson Hole, Wyoming, as the market participants push out bets for the next rate-hike. A look at Fed Fund Futures suggest Chair Janet Yellen and Co. will wait until the June 2018 to implement higher borrowing-costs, and the central bank may highlight a more shallow path for the benchmark interest rate amid the growing uncertainty surrounding the economic outlook.

In contrast, the Euro may face a more bullish fate as the ECB adopts an upbeat tone and appears to be on course to taper the asset-purchase program ahead of the December deadline. In turn, President Mario Draghiand Co. may gradually move away from the easing cycle and alter the monetary policy outlook over the coming months as ‘reflationary forces, which referred to the recovery of inflation from levels below its long-term trend, had replaced risks of deflation.’

EUR/USD Daily Chart

Topside targets remain on the radar for EUR/USD as a bull-flag formation pans out, with the pair initiating a initiates a series of higher highs & lows after breaking of out a near-term range.

Another close above the 1.1960 (38.2% retracement) region raising the risk for a run the 1.2130 (50% hurdle) as the bullish momentum appears to be gathering pace; watching the Relative Strength Index (RSI) as it flirts with overbought territory, with a break above 70 raising the risk for a larger advance in the euro-dollar exchange rate.