EUR/USD: ECB's optimism favor gains, but risk-off poses downside risks

• EUR/USD prints gains on ECB's optimistic view of the Eurozone economy. 
• ECB is watching the euro, but is not concerned about its recent strength. 
• The pair's ascent could be short-lived if stock markets remain risk-averse. 

EUR/USD stands to gain on European Central Bank's modestly optimistic view on Eurozone's economy. However, continued risk aversion could play spoilsport again. 

The pair is currently trading at 1.1834, representing a 0.17% gain on the day, having hit a low of 1.1810 during early Asian trading hours. 

ECB disappoints bears

On Thursday, the central bank's President Christine Lagarde said that Eurozone's domestic demand had recorded a significant recovery from low levels and downplayed concerns about the euro's recent appreciation against the US dollar. Markets were expecting a tougher language, especially on the exchange rate. 

As such, the shared currency is drawing bids. However, the pair is still trading well below the high of 1.1918 during Thursday's US trading hours. 

The buying pressure around the EUR had strengthened following Lagarde's comments pushing EUR/USD higher from 1.1830 to levels above 1.19. However, the rally was short-lived, as the safe-haven dollar found takers, courtesy of the US stock market drop. 

Should the European stocks track Wall Street lower, EUR/USD will likely erase gains seen at press time. 

Apart from the stock market action, the pair is likely to be influenced by the US Consumer Price Index for August, scheduled for release at 12:30 GMT. An above-forecast reading will likely draw buying pressure for the greenback. 

Technical levels

The long upper wick attached to Thursday's candle is indicative of a sell-on-rise mentality and has made Friday's close pivotal. A bearish reversal pattern will be confirmed if the spot ends the week below Thursday's low of 1.1798.