EUR/USD recedes from tops, still above 1.2200

  • EUR/USD clinches fresh highs near 1.2240 on Thursday.
  • German GfK Consumer Climate bettered to -12.9 in March.
  • US advanced Q4 GDP came in at 4.1% QoQ.

After climbing as high as the 1.2240 region, EUR/USD now faces some corrective downside to the 1.2210/15 band.

EUR/USD firmer on USD-selling

The upside momentum in EUR/USD subsides somewhat after sellers turned up in the area of recent tops near 1.2240.

In fact, the greenback now shows some signs of life and motivates EUR/USD to recede from earlier 7-week tops, although the bid bias stays largely unchanged ahead of the opening bell in Wall St. on Thursday.

In the domestic calendar, the German Consumer Confidence tracked by GfK bettered to -12.9 for the month of February (from -15.5), while the ECB’s M3 Money Supply expanded at an annualized 12.5% and Private Sector Loans rose 3.0% from a year earlier.

In the US, Initial Claims rose 763K WoW, Durable Goods Orders expanded above estimates 3.4% MoM in January and flash GDP figures showed the economy is seen expanding 4.1% inter-quarter during the October-December period.

What to look for around EUR

EUR/USD finally surpasses the 1.2200 barrier, clinching new monthly peaks at the same time. The bullish sentiment in the euro now looks improved and could be supportive of extra strength in the short-term horizon. This, in turn, remains supported by the prospects of extra fiscal stimulus in the US, real interest rates favouring Europe vs. the US and hopes of a solid economic rebound in the next months.

Key events in Euroland this week: 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 0.46% at 1.2218 and a breakout of 1.2272 (weekly high Dec.17) would target 1.2349 (2021 high Jan.6) en route to 1.2413 (monthly high Apr.17 2018). On the downside, the next support at 1.2098 (21-day SMA) followed by 1.2023 (weekly low Feb.17) and finally 1.2013 (100-day SMA).

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