- EUR/USD has been on as markets focus on the vaccine-led recovery.
- US Durable Goods Orders and virus news are set to dominate trading.
- Monday's four-hour chart is showing the currency pair is on the verge of overbought conditions.
US dollars are coming to Europe – the EU is set to welcome vaccinated American tourists in the summer, which is just around the corner. Apart from having a positive direct effect on EUR/USD, the potential revival of the old continent's tourism sector is one of the reasons the euro is on the rising.
Monday's loosening of restrictions in Italy and France is another positive development. More importantly, the pace of inoculations has substantially picked up in Europe with another acceleration on the cards during the remainder of April and throughout May. Roughly 42% of Americans have received at least one jab, and the rate is only half across the pond – but picking up much-needed steam.
The European Central Bank's cautiously optimistic message on Thursday – upgrading its risk assessment to balanced instead of to the downside – is another boost to the euro.
See ECB Analysis: Lagarde offers four subtle changes that may send the euro higher
Broader markets are also favoring additional EUR/USD gains. The safe-haven dollar is on the back foot as investors refocus on recovery rather than on India's horrific COVID-19 crisis, which has implications well beyond South Asia. The US, the UK, and other countries are sending support to Delhi and Mumbai as infections set daily records, partially in self-interest to prevent a slowdown that may come back to haunt developed economies.
The focus is later set to shift to US Durable Goods Orders. Investment has probably picked up in March after a drop in February. The 2.5% expected pickup in the headline figure and the projected 1.5% rise in Nondefense ex Aircraft – aka "core of the core" – feed into Thursday's all-important growth figures.
The Federal Reserve is also eyeing the data. The world's most powerful central bank is set to leave its policy unchanged on Wednesday, but to take stock of the surge in US economic activity and perhaps begin signaling a decrease in its massive bond-buying. Printing fewer dollars would boost the greenback. However, at least on Monday, the notion of ongoing fed support is weighing on the currency.
Overall, fundamentals point to extended gains for EUR/USD.
EUR/USD Technical Analysis
Euro/dollar is trending higher since late March, as the four-hour chart shows. On its way up, the currency pair topped the early-March peak of 1.2110 and hit a new high of 1.2116 – a level last seen in late February.
Momentum is to the upside and the Relative Strength Index (RSI) is just under 70. If this indicator tops that level, it would enter overbought conditions and signal a correction. However, bulls currently remain in control.
Above 1.2116, the next levels to watch are 1.2170 and 1.2250.
Support awaits at the previous April peak of 1.2180, followed by the battle line of 1.2050 and then by the psychological barrier of 1.20.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD extends gains due to improved risk appetite
The Australian Dollar maintained its winning streak for the fourth consecutive session on Monday, buoyed by a hawkish sentiment surrounding the Reserve Bank of Australia. This optimism bolsters the strength of the Aussie Dollar, providing support to the AUD/USD pair.
USD/JPY snaps three-day losing streak above 153.50, Yellen counsels caution on currency intervention
The USD/JPY pair snap a three-day losing streak during the Asian trading hours on Monday. The uptick of the pair is bolstered by the modest rebound of the US Dollar and US Treasury Secretary Janet Yellen’s comments on potential Japanese interventions last week.
Gold price rebounds on downbeat NFP data, softer US Dollar
Gold price snaps the two-day losing streak during the Asian session on Monday. The weaker-than-expected US employment reports have boosted the odds of a September rate cut from the US Federal Reserve. This, in turn, has dragged the US Dollar lower and lifted the USD-denominated gold.
Bitcoin Cash could become a Cardano partnerchain as 66% of 11.3K voters say “Aye”
Bitcoin Cash is the current mania in the Cardano ecosystem following a proposal by the network’s executive inviting the public to vote on X, about a possible integration.
Week ahead: BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.