The Euro is showing strength

The Euro is showing strength in early European session and, after bouncing from 1.4975 ahead of the European session opening, to bounce up breaking above 1.5040 session high and reaching levels around 1.5070 at the moment of writing.Next resistance levels, at this point, lie at at 1.5085 (Nov 30 high) and above here, 1.5100 and 1.5140/45 Nov 26/25 high). On the downside, below 1.5040, support levels lie at at 1.4970 (session low), and below here, 1.4920/25 and 1.4870.According to Nicole Elliott, senior technical analyst at Mizuho Corporate Bank, the Euro could re-test year highs over next sessions: "We see this as a potential interim low might be in place and we shall now re-test this year’s high at 1.5145. Record futures volume on Friday adds weight to this view."The dollar relinquished its previous session’s strength against the majors, falling toward the 1.4850-level against the euro and the 1.6602-handle versus the British pound. The US equity bourses rebounded with the Dow Jones advancing by 1.65%, the S&P 500 advancing by 1.84% and the Nasdaq up by nearly 1.7% by the afternoon session. Crude oil also climbed back above the $80-per barrel mark. Optimism over the outlook for the US economy was reinforced by reports released earlier in the morning – prompting traders to jump back into riskier assets and sending the euro higher. The advanced reading of Q3 GDP sharply reversed the previous quarter’s decline of 0.7% and beat consensus estimates for an increase of 3.3%, instead surging by 3.5%. The advanced Q3 sales component of GDP advanced by 2.5%, compared with 0.7% from Q2 while the headline PCE index increased by 2.8% from 1.4% previously. Weekly jobless claims fell by less than expected, marginally lower to 530k from 531k a week earlier.The calendar for Friday consists of September personal income, personal consumption, PCE, core PCE, NAPM, Chicago PMI and the University of Michigan consumer sentiment survey. Following the disappointing Conference Board’s consumer confidence earlier this week, traders will focus on the University of Michigan consumer sentiment survey, expected to decline to 70.0 in October from 73.5 a month earlier. The expectations component is forecasted to decline to 69.0 from 73.5, while the current conditions index is seen slipping to 72.1 from 73.4.The dollar sold off sharply across the board in the Wednesday session despite a dearth of US economic data earlier in the morning. The greenback plunged to a fresh 14-month low against the euro past the psychologically key 1.50-level to 1.5040, a new 15-month low versus the Swiss franc at 1.0038 and 14-month low against the Australian dollar at 0.9326. A shift into riskier assets continues to be detrimental for the US dollars as traders price in improving conditions in the global economy. Crude oil prices climbed higher today, rallying above the $81 per barrel level by afternoon trading.The Fed’s Beige Book provided an optimistic assessment of the US economy, saying conditions have stabilized or improved modestly in many sectors since its last report. The Fed said that reports of gains in economic activity outnumber the declines, though the improvements are small and scattered. However, it tempered its assessment by saying adding that labor markets are typically characterized as weak or mixed, albeit with pockets of improvement. The economic calendar for Thursday will see weekly jobless claims, August home prices and the September leading economic indicators index. Weekly jobless claims are estimated to edge up slightly to 515k from 514k in the previous week. Meanwhile, the leading economic indicators index is forecasted to improve to 0.80% from 0.60% in August.