EUR/USD climbs to monthly highs beyond 1.2170

EUR/USD manages to leave behind the earlier dip to the 1.2130 region and retakes the upper end of the range in the 1.2170/80 band, or new monthly peaks.

EUR/USD now looks to 1.2200

EUR/USD looks to extend the recent breakout of the key hurdle at 1.2100 the figure amidst the broader rebound from monthly lows in the vicinity of 1.1980 recorded during last week.

The recent upside in the pair gathered extra steam on the back of the increasing selling pressure in the greenback, particularly after the big miss in April’s Payrolls published last Friday (+266K vs. 978K exp.).

Supporting the better mood in the European currency, yields of the German 10-year Bund gather extra steam and test once again the -0.20% area, or multi-day highs.

Nothing scheduled in the domestic docket and across the pond, while the centre of the debate is expected to gyrate around US inflation figures tracked by the CPI, Retail Sales and a slew of Fed-speakers, all due later in the week. Closer to home, the ECB minutes will be in the limelight.

What to look for around EUR

EUR/USD extended further the bounce off the 1.1985/80 band and faltered in the 1.2180 region, area coincident with a Fibo level (of the November-January rally). The rebound in the sentiment around 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: German, EMU ZEW survey (Tuesday) – EMU Industrial Production, German final April CPI (Wednesday) – ECB Accounts (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 0.08% at 1.2173 and faces the next up barrier at 1.2200 (round level) 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 1.1946 (200-day SMA) en route to 1.1887 (61.8% Fibo of the November-January rally).