Against the backdrop of anticipation for key data releases, prevailing dollar-selling sentiment has pushed EUR/USD up to 1.1800 — its highest level since July 3. Optimism regarding the economic outlook for the euro area's largest economy could strengthen and provide additional momentum to the single currency if German data comes in stronger than expected. This, in turn, should support the continuation of the EUR/USD rally.
At the same time, market reaction to a potential disappointment is likely to remain limited, given the reduced likelihood of further rate cuts by the European Central Bank and rising expectations of a more accommodative monetary policy from the U.S. Federal Reserve. This suggests that the broader trend for EUR/USD remains upward, and any corrective declines could be seen as favorable opportunities to enter long positions.
Positive oscillators confirm the bullish forecast. Above the psychological level of 1.1800, EUR/USD will attempt to challenge the yearly high near 1.1830, reached on July 1.
