EURUSD ended the day with gains on Wednesday, August 12. The pair added 0.38% to 1.1784. After dropping to a low of 1.1709, the single currency rebounded sharply and touched the 1.1817 mark during the North American session. In Asian trading on Thursday, buyers managed to gain a foothold above 1.18 and advance to 1.1831.
The euro recovered amid broad-based dollar weakness amid a 5% rally in gold, up from the Asian low of $1,862 to $1,949. European and US equity benchmarks closed in the green. The Dow Jones Industrial Index jumped 1.05% and the Nasdaq surged 2.13%.
02:50 – Japan: PPI (July)
09:00 – Germany: CPI (July)
15:30 – US: initial jobless claims
15:30 – US: export prices (July)
15:30 – US: import prices (July)
The ongoing rebound is fully with our expectations. The uptick in euro cross pairs and the recovery in gold prodded the bulls to push as high as 1.1838. Strong buying was also seen in Asian trading for the same reasons.
On Wednesday, EURGBP surged to 0.9053 on the back of a lackluster UK Q2 GDP report. Today the cross pair is again aligned with euro buyers. At the time of writing, all major cross pairs were trading in the green. This implies powerful support for the key EURUSD pair. As a result, in our forecast, we expect to see selling in the range of 1.1845-1.1874 range, and afterwards a decline to 1.1800 or lower could be in the offing.