The EURUSD pair is in jubilant mood today. The price is trading at 1.1710, which is the highest it has been since September 2018. Also, the pair has been in the green for the past six consecutive days.
Investors are bullish on the euro
The first reason why the EURUSD pair is surging is that investors remain hopeful about the euro. On Friday, data from CFTC showed that speculative net positions on the euro rose to 125k, from the previous 110k. The positions have been rising since the first week of July, when they were at 99K.
While the futures market is a relatively small one, it is sending a signal of where hedge funds and other speculators are.
The investors are mostly bullish about the euro because of the recently-passed 750-billion-euro EU recovery fund. By reaching a deal, EU leaders averted a major crisis in Europe, where the number of coronavirus cases has been falling. A funding crisis would have reminded investors of the past debt crisis that happened between 2011 and 2012.
At the same time, the EURUSD pair has risen because of the upbeat economic data from Europe. On Friday, data from Markit showed that manufacturing and services PMIs jumped to the highest levels in months. That was an indication that the countries were returning to growth and forming a V-shaped recovery. Today, IFO Institute is expected to release upbeat economic sentiment numbers from Germany.
Meanwhile, the EURUSD is rising because of the weakness of the US dollar. The dollar has weakened against most currencies because of the rising number of coronavirus cases. Yesterday, the US confirmed more than 54,000 new cases as the total number of cases has reached 4 million.
EURUSD technical outlook
The EURUSD pair is trading at 1.1710. On the daily chart, the price is above the 50-day and 100-day exponential moving averages. Also, the price is at its highest level since September 2018 while the RSI has moved to the highest it has been since March this year. Therefore, I expect the bullish trend will continue as bulls target the next resistance at 1.1800. Still, I expect the pair to form several pullbacks.
However, a move below 1.1400 will invalidate this trend. This is an important psychological trend that is also near the highest point on June 10.