- EUR/USD has staged a recovery on upbeat vaccine and growth forecasts.
- Concerns about eurozone immunization supplies and a tad of Fed hawkish may change the picture.
- Wednesday's four-hour chart is showing the currency pair is in overbought territory.
Even before the summer – that is when most Europeans may get a COVID-19 vaccine, according to new estimates. The EU has upgraded its projections for getting its population inoculated amid promising supply estimates. Earlier, prospects for reaching a majority stood at September rather than late June.
The upbeat vaccine forecasts from the bloc joined an upgrade to economic ones from the International Monetary Fund. The IMF lifted global growth estimates to 6%, and that included upgrades to eurozone countries. Finally, some good news for the euro.
While these developments boosted the euro, the dollar suffered from falling safe-haven flows. President Joe Biden brought forward his goal of offering inoculations to all Americans from May 1 to April 19. Most states are already making appointments to get vaccinated for everybody over 18. The drop in US Treasury yields dragged the greenback down with it.
Can this bullish EUR/USD last? Markit's Services Purchasing Managers' Index for Spain came out better than expected, but that is insufficient to maintain the trend.
On the other hand, concerns about vaccines have come back to the fore. Moderna, one of the jab providers, told Germany that it is forced to delay the next shipment of vaccines – extending the trend of postponements from all pharmaceuticals.
Moreover, the EU's immunization programs heavily on AstraZeneca's inoculations, and it is unlikely that all Europeans will take it up. The European Medicines Agency (EMA) is set to provide an update on the potential correlation with blood clots. In the UK, the company's trial with children has been halted.
Another factor that could push EUR/USD lower comes from the US. The Federal Reserve is set to release the meeting minutes from its latest rate decision and it may show growing optimism. Investors may interpret an upbeat message as a subtle hint that borrowing costs are set to rise sooner rather than later – boosting the greenback.
See FOMC Minutes March 16-17 Preview: Growth without inflation?
Moreover, the recent drop in US bond yields is unlikely to last after a series of upbeat figures, from the Nonfarm Payrolls, through the ISM Services PMI and finally with JOLTs.
All in all, the currency pair's bounce may have gone too far.
EUR/USD Technical Analysis
Euro/dollar has turned higher, but a quick look at the four-hour chart. Momentum is to the upside but the Relative Strength Index is just around 70 – flirting with overbought conditions. The currency pair is trading above the 50 and 100 Simple Moving Averages but below the 200 SMA.
Resistance awaits at 1.1880, the daily high, followed by 1.1920, which provided support in mid'March. The next lines to watch are 1.1920 and 1.1950.
Support is at 1.1820, which capped EUR/USD on the way up, followed by 1.1780, 1.1760 and 1.1740.
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 holds above 0.6500 in thin trading
The Australian Dollar managed to recover ground against its American rival after AUD/USD fell to 0.6484. The upbeat tone of Wall Street underpinned the Aussie despite broad US Dollar strength and tepid Australian data.
EUR/USD comfortable below 1.0800 lower lows at sight
The EUR/USD pair lost ground on Thursday and settled near a fresh March low of 1.0774. Strong US data and hawkish Fed speakers comments lead the way ahead of the release of the US PCE Price Index on Friday.
Gold price finishes Thursday’s session set to reach new all-time highs
Gold price rallied during the North American session on Thursday and hit a new all-time high of $2,225 in the mid-North American session. Precious metal prices are trending higher even though US Treasury yields are advancing, underpinning the Greenback.
Bitcoin price extends retreat from $69K as old whales shift their holdings to new whales
Bitcoin price continues to move further away from the $69,000 threshold, gaining ground as BTC bulls hope for a retest of the $73,777 peak. This is because of the general assumption that clearing this blockade would set the tone for a reach higher, marking a new all-time high.
Bears have been standing before a steamroller so far this year
Despite a pushback on rate cuts from Christopher Waller, and what was supposed to be cautious trading sentiment ahead of critical US inflation data released later on Friday, the S&P 500 rose on Thursday, marking its best first-quarter performance in five years.