- EUR/USD looks offered around the 1.2100 level.
- January’s German flash inflation figures next of relevance.
- Advanced Q4 GDP, Initial Claims come up next in the US calendar.
Following an initial test of the 1.2080 region, EUR/USD manages to regain some traction and return to the 1.2100 neighbourhood on Thursday.
EUR/USD focused on data, USD performance
EUR/USD adds to Wednesday’s losses in the 1.2100 region, as the sentiment surrounding the risk complex remains subdued in the second half of the week.
The greenback, in the meantime, manages well to keep the bid bias unchanged against the broad-based consolidative note in the global markets. In fact, the dollar navigates the upper end of the weekly range following the steady hand of the Federal Reserve at its meeting on Wednesday and after Powell ruled out any tapering in the near/medium term.
The single currency dropped to the 1.2060 area on Wednesday – coincident with a Fibo level (of the November-January rally) – after the ECB hinted at the idea that market participants could be underestimating the firepower of the ECB. These comments look somewhat opposed to last week’s upbeat tone at the central bank’s event.
In the euro calendar, the flash German CPI for the month of January will be in the limelight later in the session. Across the pond, the advanced Q4 GDP figures will take centre stage seconded by the usual weekly Claims, the Trade Balance report and New Home Sales.
What to look for around EUR
The corrective downside in EUR/USD met contention in the 1.2060 region so far this week. The near-term outlook for the pair looks tilted towards some consolidation, although it appears constructive in the longer run and always supported by prospects of a strong recovery in the region (and abroad), which is in turn underpinned by extra fiscal stimulus by the Fed and the ECB. 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.
EUR/USD levels to watch
At the moment, the pair is up 0.01% at 1.2108 and a break above 1.2189 (weekly high Jan.22) would target 2349 (2021 high Jan.6) en route to 1.2413 (monthly high Apr.17 2018). On the flip side, the next support is located at 1.2058 (weekly low Jan.18) seconded by 1.2053 (2021 low Jan.18) and finally 1.1976 (50% Fibo of the November-January rally).
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