EUR/USD climbs to 2-day highs near 1.2050

EUR/USD regains upside traction and clinches fresh tops.
Dollar selling fuels the renewed upside momentum in the pair.
EMU’s Retail Sales expanded 2.7% MoM, 12% YoY in March.

Pablo Piovano FXStreet

Fresh buying pressure now pushes EUR/USD to fresh 2-day peaks near the 1.2050 region on Thursday.

EUR/USD up on USD-selling

EUR/USD reverses two consecutive daily pullbacks and comes back after bottoming out in the vicinity of 1.1980 on Wednesday.

In fact, sellers have re-emerged around the dollar following dovish (ish) comments from Fed speakers on Wednesday, while the steady performance of US yields is not helping the buck either.

Indeed, FOMC’s Rosengren, Mester and Evans coincided on Wednesday that it is still premature to start talking about tapering the bond-purchase programme despite the strong economic recovery. In addition, they all coincided in that bouts of higher inflation should be deemed as temporary for the time being.

In the meantime, US 10-year yields trade within a side-lined theme around 1.57% and yields of the German 10-year reference follow the same patter around -0.24%.

In the euro calendar, Retail Sales in the broader Euroland expanded at a monthly 2.7% in March and 12% from a year earlier. Later in the session, Board member af Jochnick will participate in a BIS event, Vice-President Luis De Guindos will attend a Q&A session at the EY Insights Forum Economics and Chairwoman Christine Lagarde will speak at a virtual conference on “Corporate Sustainability Reporting Directive-the way forward”, organized by the European Commission.

What to look for around EUR

EUR/USD rebounds from the 1.1985/80 band and looks to reclaim the area north of the psychological 1.20 yardstick. Despite the ongoing corrective downside in the pair, the outlook for the single currency stays constructive on the back of the investors’ shift to the improved growth outlook in the Old Continent now that the vaccine campaign appears to have gained some serious pace and solid results from key fundamentals pari passu with the surging morale in the bloc.

Key events in the euro area this week: ECB’s Lagarde speech (Thursday and Friday).

Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the vaccine rollout. Probable political effervescence around the EU Recovery Fund. German elections.

EUR/USD levels to watch

So far, spot is gaining 0.31% at 1.2041 and faces the next up barrier at 1.2150 (monthly high Apr.29) followed by 1.2243 (monthly high Feb.25) and finally 1.2349 (2021 high Jan.6). On the other hand, a breach of 1.1985 (monthly low May 5) would target 1.1942 (200-day SMA) en route to 1.1887 (61.8% 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.

AUD/USD: The 0.7000 region holds the downside, for now

AUD/USD has started the week in a negative fashion, giving away part of Friday’s uptick and refocusing on the downside. The pair’s daily decline has come on the back of the another firm performance of the Greenback, although it has met some decent contention near the 0.7000 neighbourhood.

USD/JPY struggles below 157.00 on weak USD; holds above one-month low ahead of Fed, BoJ meetings

USD/JPY attracts fresh sellers during the Asian session on Monday, stalling its recovery from the lowest level since September 18, touched Friday as a further decline in US bond yields weighs on the US Dollar. Meanwhile, the Japanese Yen benefits from a more hawkish BoJ, further weighing on the currency pair. The downside, however, seems limited as traders keenly await Fed and BoJ policy meetings later this week.

Gold holds on just above $4,000

Gold clings to daily gains, leaving behind two daily drops in a row and reclaiming the key $4,000 mark per troy ounce and above on Monday. The better tone in the US Dollar and mixed US Treasury yields accompany the precious metal’s uptick, while declining crude oil prices appear to sustain the bounce for now.

Bitcoin vs Gold: BTC springs above $80K as XAU tops $4,000 amid low compressed volatility

Bitcoin (BTC) is bouncing back above $80,000 on Monday, while Gold (XAU/USD) is springing above the pivotal $4,000 level, up a modest 0.34% and 0.64%, respectively. Both assets are advancing amid low volatility as market participants position ahead of the Federal Reserve’s (Fed) decision on Wednesday and earnings from several major tech companies.

Everyone's bracing for a hawkish central bank week. Here's why the surprise could be dovish

Five of the world's major central banks are preparing to announce monetary policy decisions this week, with investors increasingly anticipating higher interest rates as the global energy shock continues to push inflation above target.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.