EUR/USD firmer, approaches 1.1000 on Fed easing speculation

  • EUR/USD picks up pace and trades closer to 1.1000.
  • Fed’s Powell leaves the door open for further stimulus.
  • US Q4 GDP, weekly Claims, flash Trade Balance figures next on tap.

The upbeat mood in the single currency is now gathering extra traction and is lifting EUR/USD to the 1.0980 region.

EUR/USD in weekly highs near 1.1000

EUR/USD has picked up further pace in response to comments by Chief J.Powell at his interview earlier on Thursday.

Indeed, Fed’s Powell put the buck under further pressure after he left the door open for extra easing of the monetary conditions, stressing at the same time that there is still room for further action by the central bank and that it will step in aggressively as soon as credit is not flowing.

In addition, Powell hinted at the possibility that the US economy could already be in a recession and he suggested that the subsequent rebound of the economic activity hinges on the developments from the ongoing coronavirus pandemic.

Earlier in the session, the German Consumer Climate tracked by GfK deteriorated sharply for the month of April, falling to 2.7 from March’s 8.3 (revised from 9.8).

Still in the docket and later in the NA session, all the attention will be on the weekly release of Initial Claims, relegating advanced Trade Balance results and another estimate of the Q4 GDP to a secondary role.

What to look for around EUR

EUR/USD keeps the ‘recovery-mode’ well in place in the second half of the week, always following USD-dynamics, developments from the coronavirus and the response from overseas central banks and governments. On the latter, the Fed’s latest round of stimulus plus the US $2 trillion coronavirus aid package have been collaborating further with the rebound in the pair via a weaker dollar. On the macro view, better-than-forecasted PMIs in both Germany and the broader Euroland opened the door to some respite in the prevailing downtrend in fundamentals in the region, although the underlying stance still remains well on the negative side.

EUR/USD levels to watch

At the moment, the pair is gaining 0.77% at 1.0965 and a breakout of 1.0992 (monthly low Jan.29) would target 1.1008 (55-day SMA) en route to 1.1082 (200-day SMA). On the downside, the next support lines up at 1.0814 (78.6% Fibo of the 2017-2018 rally) followed by 1.0635 (2020 low Mar.23) and finally 1.0569 (monthly low Apr.10 2017).

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