EUR/USD climbs to 3-month highs beyond 1.2200

The buying pressure around the single currency remains well and sound for yet another session and lifts EUR/USD to fresh 3-month peaks beyond 1.2200 the figure on Tuesday.

EUR/USD stronger on USD-selling

EUR/USD advances for the fourth consecutive session on turnaround Tuesday, extending the recovery further north the key 1.2200 barrier for the first time since later February.

The selling pressure around the greenback keeps gathering traction despite the steady performance of US yields. Closer to home, yields of the German 10-year Bund navigate the upper end of the range around -0.10% and lend further legs to the pair’s rally.

Also supporting the bounce in spot appears the generalized better mood surrounding the risk-associated universe.

Later in the euro docket, another revision of the Q1 GDP figures in the broader Euroland will take centre stage. Across the pond, Housing Starts and Building Permits will be in the limelight along with the weekly report on US crude oil inventories by the API.

What to look for around EUR

EUR/USD finally breaks above the key 1.2200 hurdle amidst the continuation of the recovery from last week’s lows in the mid-1.2000s, always on the back of the strong bounce in yields of the German 10-year Bund and the generalized upbeat tone in the risk complex. The sustained rebound in the pair also comes in response to 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: Advanced EMU Q1 GDP (Tuesday) – Final EMU April CPI (Wednesday) – German/EMU flash May PMIs, advanced Consumer Confidence (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 0.58% at 1.2218 and faces the next hurdle at 1.2243 (monthly high Feb.25) followed by 1.2300 (round level) and finally 1.2349 (2021 high Jan.6). On the downside, a break below 1.1985 (monthly low May 5) would target 1.1955 (200-day SMA) en route to 1.1887 (61.8% Fibo of the November-January rally).