EUR/USD bounces off lows and re-targets 1.2100

EUR/USD comes back after testing the mid-1.2000s.
Better mood in the risk complex lends support to EUR.
EMU’s advanced Q4 GDP figures come up next.

Pablo Piovano FXStreet

The single currency regains the smile and pushes EUR/USD back to the 1.2090 region on turnaround Tuesday.

EUR/USD looks to data, risk appetite

EUR/USD attempts a rebound following the strong correction lower to the mid-1.2000s recorded at the beginning of the week.

Tuesday’s session kicked off with a better tone in the risk complex and motivates investors to re-position in the shared currency, as the demand for the dollar appears somewhat subdued for the time being.

Later in the session, advanced GDP figures in the euro area for the fourth quarter are only due in the domestic calendar. Across the pond, the IBD/TIPP Index is due followed by the API’s report and speeches by FOMC’s L.Mester and J.Williams.

What to look for around EUR

Occasional legs lower in EUR/USD remain contained in the 1.2050 band so far. The near-term outlook for the pair looks tilted towards some consolidation, although it appears constructive in the longer run and always 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 0.06% at 1.2066 and a breakout of 1.2173 (23.6% Fibo of the November-January rally) would target 1.2189 (weekly high Jan.22) en route to 1.2349 (2021 high Jan.6). On the other hand, the next support is located at 1.2056 (weekly low Feb.1) seconded by 1.2053 (2021 low Jan.18) and finally 1.1976 (50% Fibo of the November-January rally).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

EUR/USD trims gains, back below 1.1800

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