EUR/USD has room to extend its gradual drift higher

EUR/USD has been advancing as concerns about US inflation have subsided. Further gains? German optimism, ECB speculation and uptrend support point higher, FXStreet’s Analyst Yohay Elam briefs.

Europe is now benefitting from a steady recovery that supports the common currency

“Germany's ZEW institution is set to release its Business Climate survey figures for June, and additional increases are on the cards. The EU eased travel restrictions on Monday en route to using the "green passport" next month. COVID-19 cases continue falling sharply across the old continent.”

“Tensions are mounting toward the ECB's decision on Thursday, where the Frankfurt-based institution is set to acknowledge the recovery but without pressing on the brakes. Refraining from tapering should keep the mood upbeat.”

“Treasury Secretary Janet Yellen said that an increase in interest rates would be a ‘plus’ for the US economy and the Fed. The central bank and markets are awaiting Thursday's release of fresh Consumer Price Index figures. Any figure above 5% could spook markets and boost the dollar, but the dollar will likely remain pressured on Tuesday.”

“Resistance awaits at the round level of 1.22, which held the pair back on Monday. It is then followed by 1.2255 and 1.2266 – the latter being the high point in May.”

“Some support awaits at 1.2160, which provided support last week, followed by 1.2145, a stepping tone on the way up, the last defense before 1.21.”