EUR/USD: A tad of positive developments set to send euro rallying
|EUR/USD is changing hands near 1.22. According to FXStreet’s Analyst Yohay Elam, euro is set to rally after weathering two storms.
The next moves hinge on US consumer sentiment and also infrastructure talks
“The first downbeat development came from the European Central Bank, which decided to maintain an elevated pace of bond-buying. Moreover, reports coming out after the event suggested that only three out of 25 members supported some kind of a tapering down of the Pandemic Emergency Purchase Program (PEPP). The bank is set to print more euros for longer.”
“The dollar failed to benefit from higher than expected inflation figures. The headline Consumer Price Index (CPI) hit the round 5% mark. Core CPI also exceeded estimates by 3.8%. However, US Treasury yields extended their falls instead of rising. Investors seem convinced that the Federal Reserve will refrain from any hint of tapering down its current pace of bond-buying, seeing inflation as transitory.”
“After holding up near 1.22, can EUR/USD extend its gains? The economic calendar features the preliminary University of Michigan's Consumer Sentiment Index for June. A small increase is on the cards, and investors will also watch the inflation components. However, without a fresh surge, the dollar could suffer.”
“Another factor is infrastructure news. According to reports, a bipartisan group suggested a $1.2 trillion expenditure plan that could pave the path for providing the US economy another boost. Details are still lacking and so is a blessing from President Joe Biden, who is at the -7 meeting in London.”
“On the virus front, Europe continues catching up with the US on vaccinations, yet is still behind. Nevertheless, it is another minor bullish development.”
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