- EUR/USD advances further and flirts with monthly tops.
- Lower US yields keep the mood around the dollar depressed.
- Better-than-expected PMIs lend extra legs to the pair.
The European currency retakes the bid bias and pushes EUR/USD to shouting distance from monthly peaks in the 1.2070/80 band on Friday.
EUR/USD looks bid on data, USD-selling
EUR/USD advances to 3-day highs and leaves behind Thursday’s pullback on the back of the persistent sell-off in the greenback.
In fact, the dollar loses further ground pari passu with the soft note in US yields, with the 10-year benchmark hovering over multi-week lows around 1.53%.
With the ECB event now in the rear mirror, the euro gained extra steam after flash Manufacturing and Services PMIs in the core Euroland came in above expectations for the current month.
Later in the session, Chief Lagarde will participate in the panel “A Global Tipping Point: The Power of Global Capital Markets in the Fight Against Climate Change”.
In the US docket, Markit will also publish its flash gauges seconded by March’s New Home Sales.
What to look for around EUR
EUR/USD moved to fresh peaks around 1.2080 before losing some traction amidst the resurgence of dollar demand and volatility on fresh coronavirus woes. The continuation of the rally has been so far supported by the renewed offered bias in the dollar along with the investors’ shift to the growth prospect in Europe now that the vaccine campaign appears to have gained some serious pace. In addition, solid results from key fundamentals and the improvement in the sentiment in the euro area as of late also appear to bolster the momentum surrounding the single currency.
Key events in the euro area this week: ECB 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.
EUR/USD levels to watch
At the moment, the index is gaining 0.44% at 1.2066 and faces the next hurdle at 1.2079 (monthly high Apr.20) followed by 1.2243 (monthly high Feb.25) and finally 1.2349 (2021 high Jan.6). On the other hand, a breach of 1.1953 (50-day SMA) would target 1.1919 (200-day SMA) en route to 1.1762 (78.6% Fibo of the November-January rally).
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