EUR/USD looks firmer and targets 1.2200 ahead of data, Powell

  • EUR/USD extends the upside to the 1.2180 region.
  • EMU’s final January CPI next on tap in the docket.
  • Chief Powell will testify before the Congress later in the day.

The shared currency keeps the smile for yet another session and pushes EUR/USD to fresh multi-day highs in the 1.2180 area.

EUR/USD now focuses on 1.2200

EUR/USD advances for the fourth consecutive session so far on Tuesday. The persistent upside remains underpinned by the unabated decline in the greenback despite the firm note in US yields as of late.

The euro and the rest of the risk complex keep the buying interest intact, always on the back of rising hopes of a strong bounce in the global economic recovery, which are in turn sustained by imminent extra fiscal stimulus in the US, the reflation trade and the vaccine rollout.

Later in the session, the Italian industrial sector will publish results ahead of the final inflation figures in the euro area for the month of January.

However, the centre of the debate will gyrate around the testimony by Fed’s Powell on the Semiannual Monetary Policy Report. In addition, housing data are also due followed by the Consumer Confidence measured by the Conference Board.

What to look for around EUR

EUR/USD advances further north of the 1.2100 mark and faces the critical hurdle near the 1.2200 mark. The constructive outlook for the pair, however, is expected to remain unchanged in the longer run, always supported by the reflation/vaccine trade and hopes of a strong recovery in the region. In addition, real interest rates continue to favour the euro area vs. the US, which is also another factor supporting the EUR along with the huge, long positioning in the speculative community.

Key events in Euroland this week: January’s final inflation figures (Tuesday). German final Q4 GDP results (Wednesday). European Council meeting (Thursday and Friday). ECB’s Lagarde will participate in the G20 meeting of central bank governors and finance ministers on Friday

Eminent issues on the back boiler: EUR appreciation could trigger ECB verbal intervention, always on inflation issues. EU Recovery Fund. Huge long positions in the speculative community.

EUR/USD levels to watch

At the moment, the index is gaining 0.09% at 1.2164 and a breakout of 1.2179 (weekly high Feb.23) would target 1.2189 (weekly high Jan.22) en route to 1.2349 (2021 high Jan.6). On the downside, the next support at 1.2023 (weekly low Feb.17) followed by 1.2004 (100-day SMA) and finally 1.1952 (2021 low Feb.5).

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