EUR/USD resumes the upside beyond 1.2100 ahead of ECB
|- EUR/USD regains upside traction above the 1.2100 mark.
- Risk appetite continues to favour the single currency.
- ECB’s interest rate decision due later in the session.
The shared currency regains the smile and motivates EUR/USD to reclaim the area above 1.2100 the figure in the second half of the week.
EUR/USD looks to data, ECB
EUR/USD reverses Wednesday’s pullback and improves above the 1.2100 barrier on the back of the renewed selling pressure hurting the greenback.
The reflation trade is back to the markets and sustain the fresh improvement in the risk complex, particularly following Biden’s inauguration and his plans to boost fiscal spending by around $1.9 trillion.
In the euro calendar, the ECB is expected to leave its monetary policy conditions unchanged at its event later in the session. However, President Lagarde could voice concerns over the pick-up of coronavirus cases in the region, the tighter restrictions to contain the pandemic and the ultimate impact on the growth prospects. in addition, the European Commission (EC) will publish its advanced gauge of the Consumer Confidence for the current montht.
Across the pond, the usual Initial Claims will take centre stage in the first turn seconded by the Philly Fed index and results from the housing sector.
What to look for around EUR
The leg lower in EUR/USD seems to have met decent contention in the mid-1.2000s for the time being. Despite the recent corrective downside, the outlook for EUR/USD remains constructive and appears supported by prospects of a strong recovery in the region (and abroad), which is in turn underpinned by extra fiscal stimulus by the Fed and the ECB. In addition, real interest rates continue to favour the euro area vs. the US, which is also another factor supporting the EUR along with the huge, long positioning in the speculative community.
EUR/USD levels to watch
At the moment, the pair is up 0.32% at 1.2143 and a break above 1.2349 (2021 high Jan.6) would target 1.2413 (monthly high Apr.17 2018) en route to 1.2476 (monthly high Mar.27 2018). On the flip side, the next support is located at 1.2062 (55-day SMA) seconded by 1.2053 (2021 low Jan.18) and finally 1.1976 (50% Fibo of the November-January rally).
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