Euro rises on strong eurozone data

Kenny Fisher MarketPulse

After a quiet start to the week, the euro has posted gains in the Tuesday session. Currently, EUR/USD is trading at 1.2126, up 0.43% on the day.

Eurozone inflation confidence jump

There was positive news out of the eurozone on Tuesday, and investors responded with a thumbs-up, sending the euro above the 1.21 level. German CPI rebounded nicely in December, with a solid gain of 0.5 per cent. Inflation has struggled in Germany, as prior to this reading, CPI had declined in four of the past five months. Will we see inflation levels head higher in 2021? Although Covid-19 continues has resulted in lockdowns across the bloc which continue to hobble economic activity, the roll-out of Covid vaccines is expected to turn the tide and result in a resurgence in the economy and send inflation higher.

Financial experts are feeling more optimistic about economic conditions for the German economy. Germany’s ZEW Economic Sentiment improved in January to 61.8, up from 55.0 and above expectations. This marked a 4-month high. The report found that there is optimism over economic conditions, with expectations that inflation and exports will move higher. It was a similar story for the all-eurozone index, which climbed to 58.3 points. In the meantime, however, headline inflation in the eurozone is pointing downwards. We’ll get a look at CPI on Wednesday, with headline CPI expected at -0.3% for a fourth consecutive month.

The US will not release any tier-1 events until Thursday, after the inauguration of Joe Biden on Wednesday. Recently, the direction of the US dollar has been more dependent on US Treasury yield movement than on major events. This was apparent late last week, as the US dollar surged against the euro despite weak employment and retail sales numbers. If the demand for US Treasuries continues, the dollar could show gains.

EUR/USD Technical

EUR/USD is testing resistance at 1.2125. Above, 1.2282 an important weekly resistance line.
The 50-MA line is within striking distance at 1.2070. Below, we find support at 1.2059, followed closely by support at 1.2040.

Author

Kenny Fisher

MarketPulse

A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities.

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold jumps above $5,000 as China's gold buying drives demand

Gold price rises to near $5,035 during the early Asian session on Monday. The precious metal extends its recovery amid a weaker US Dollar and rising demand from central banks. The delayed release of the US employment report for January will be in the spotlight later on Wednesday.

Week ahead: US NFP and CPI data to shake Fed cut bets, Japan election looms

US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.