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EUR/USD spot rate at time of writing: 1.1937Bank transfer rate (indicative guide): 1.1520-1.1604FX specialist providers (indicative guide): 1.1759-1.1831More information on FX specialist rates hereThe Euro-to-Dollar rate was looking for a foothold above earlier technical resistance Wednesday having broken to new highs in the prior session, although parts of the analyst community are increasingly questioning whether it will be able to sustain such lofty heights without setback.

Europe's unified unit was a fraction lower Wednesday but still trading comfortably above 1.1915 as the market digested official data revealing a surge in the Eurozone current account surplus for the month of June, which came alongside other figures that confirmed a steady 1.2% core inflation rate for July.

"In the financial account, euro area residents made net acquisitions of foreign portfolio investment securities totalling €514 billion in the 12-month period to June 2020 (up from €134 billion in the 12 months to June 2019). Over the same period, non-residents made net acquisitions of euro area portfolio investment securities amounting to €439 billion (up from €132 billion)," the European Central Bank (ECB) says.

June's €20.7bn current account surplus came in the face of expectations for a balance of only +€7 bn but relates to the end of the second quarter and a period for which Eurozone economic outcomes are already known. Core inflation of just 1.2% surprised nobody but serves as a cautionary tale for Euro-Dollar bulls.

Europe's single currency rose nearly 10% in the three months to mid-August and was up 6.49% for 2020 on Wednesday following moves that also helped lift the trade-weighted Euro sharply too.

"We think this month’s advance data for August will provide a dovish setup ahead of the September ECB meeting, but the truth is that we still don’t have a clear view of the underlying core inflation trend in EZ. We are fairly certain that it has taken a hit, in line with the central bank’s forecasts, but we need more, and cleaner data, to get a clearer picture," says Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics.

Above: Euro-to-Dollar rate shown at 15-minute intervals alongside Dollar Index (orange line, left axis).

A rising currency will work against the European Central Bank mission to deliver higher inflation, of "close to, but below two percent," which it hasn't been able to do for a number of years even in the best of times.

Even before the pandemic, weak inflation pressures had seen the ECB spend tens of billions per month hoovering up European bonds in an effort to coax the Eurozone economy into producing more robust price growth.

"We added to long-held longs on that break but will be looking to trim those back should we dip back below 1.1900. Overall though, the consolidation phase is over and we expect the broad pattern of gains to reassert itself. Clearly, 1.20 is the next obstacle and we would expect decent resistance at that level," says the London FX dealing desk at J.P. Morgan, in a morning missive.

The higher the Euro rises the more upward pressure might be found on the trade-weighted single currency, which reduces import costs and potentially consumer price inflation too. A disinflationary impulse risks necessitating a response from the ECB, or at least rhetoric aimed at restraining the Euro.

This is partly why enthusiasm for Europe's single currency is cooling, even among some of the more bullish voices in the market. Meanwhile, there are warning signals coming off the charts, suggesting that another consolidation if-not correction lower could be due.

Above: Euro-to-Dollar rate shown at daily intervals alongside Dollar Index (orange line, left axis).

"We have a 13 count and TD resistance at 1.2014, but for now provided that dips remain well-supported by both the 1.1646/36 (a double Fibo) and the 3-month uptrend at 1.1581 an upside bias is maintained," says Karen Jones, head of technical analysis for currencies, commodities and bonds at Commerzbank. "I have a number of warning signals and will stand aside today."

The Euro rally above 1.19 came aside an exodus from the U.S. Dollar and amid multiple competing narratives seeking to explain price action.

With the Euro at two-year highs, other correlated currencies like the Aussie and New Zealand Dollars were also seen on the front foot while the U.S. Dollar Index remained near new two-year lows struck in the prior session.

"Over the long term, the relative growth outlook between the US and the Eurozone could decide the direction of travel for EUR/USD. The downside risks to the US outlook could increase after the November US election. All that could strengthen the repatriation process out of the USD and in the EUR in 2021," says Valentin Marinov, head of FX strategy at Credit Agricole CIB. "EUR/USD continues to trade well below its long-term fair value of 1.2400."