EUR/USD pushes higher and reaches tops near 1.2070

  • EUR/USD’s daily upside clinches peaks near 1.2070.
  • The greenback tumbles further and breaches the 91.00 level.
  • German 10-year Bund yields climb to highs near -0.22%.

The buying pressure around the European currency picks up further pace and lifts EUR/USD to new 3-day highs around 1.2070.

EUR/USD bid on USD weakness

EUR/USD manages to return to the positive territory following two consecutive daily pullbacks, regaining around a cent since weekly lows in the 1.1990/85 band (Wednesday).

The renewed bullish momentum in the pair comes exclusively in response to the increasing selling pressure hitting the buck, particularly after somewhat disappointing data from the ADP report on Wednesday and dovish comments from FOMC members, who talked down any chances of tapering (for the time being) and reiterating the idea that upticks in inflation should be temporary.

Earlier in the euro calendar, Retail Sales in the bloc expanded at a monthly 2.7% in March and 12% from a year earlier. In the US, Initial Claims rose by 498K from a week earlier, advanced Nonfarm Productivity is expected to expand 5.4% QoQ in Q1 and Unit Labor Costs are seen contracting 0.3% QoQ during the same period.

What to look for around EUR

EUR/USD rebounds from the 1.1985/80 band and looks to reclaim the area north of the psychological 1.20 yardstick. Despite the ongoing corrective downside in the pair, the outlook for 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: ECB’s Lagarde speech (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 0.48% at 1.2061 and faces the next up barrier at 1.2150 (monthly high Apr.29) 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 1.1942 (200-day SMA) en route to 1.1887 (61.8% Fibo of the November-January rally).

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