EUR/USD: Well placed for 1.22 on USD sell-off, focus on Eurozone GDP, Lagarde
|- EUR/USD refreshes weekly top, stays on the front foot for fourth consecutive day.
- Vaccine optimism extends US dollar weakness amid a light calendar.
- Eurozone GDP could justify European Commission’s upbeat forecast.
- ECB President Lagarde may add to vaccine news, economic recovery hopes.
EUR/USD posts mild gains around 1.2165, up 0.11% intraday, after an initial uptick to refresh the weekly top ahead of Tuesday’s European session. Although the broad US dollar selling, amid risk-on mood, favors the bulls, the currency major pair awaits second readings of Eurozone Q1 GDP and comments from ECB President Christine Lagarde for fresh impulse.
Vaccine news propels greenback’s weakness …
Optimism surrounding the coronavirus (COVID-19) vaccine could be cited as the major reason for the latest risk-on mood, which in turn exerts downside pressure on the US dollar. That said, the US dollar index (DXY) refreshed a one-week low before recently taking rounds to 90.10, down 0.15% on a day.
US President Joe Biden is up, for the first time, to share the American authorized covid vaccine, around 20 million doses, with the nations in need. On the same line is China’s support for the global drive to abandon vaccine patents and fasten the cure’s production. Further, updates that COVID-19 jabs from Moderna and Pfizer are capable of taming the Indian variant of the virus offer extra support to the market bulls.
Other than the vaccine news, the US push for peace in Gaza and an absence of key data in Asia allow the markets to consolidate the previous day’s losses.
Amid these plays, stock futures are mildly bid while the US 10-year Treasury yields remain firm around 1.65%.
It’s worth mentioning that better-than-forecast US data and the Fed policymakers’ sustained rejection to the need for tapering, except for Dallas Fed President Robert Kaplan, weighed on the greenback the previous day.
Looking forward, the EUR/USD pair traders will seek confirmation of the European Commission’s (EC) upbeat GDP forecasts, 4.3% for 2021, to keep the bulls hopeful. “The second estimate of Q1 GDP will provide more information around the contributions to output (market f/c: -0.6%qtr, -1.8%yr),” said Westpac.
Also, traders may hear ECB’s Lagarde more closely amid vaccine jitters with Pfizer and Johnson & Johnson.
Technical analysis
Not only Monday’s top near 1.2170 but multiple resistances since late January stand tall to test the EUR/USD bulls around 1.2180-90. Meanwhile, the 1.2100 threshold can entertain short-term sellers ahead of challenging the EUR/USD bears with a 1.2085-80 support confluence comprising 21-day SMA and an ascending support line from March 31.
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