EUR/USD to extend its advance towards the 1.2240 mark

EUR/USD is climbing toward 1.22, the highest since February, amid the risk-on mood. As FXStreet’s Analyst Yohay Elam notes, Europe's reopening is supporting the euro while the Fed's dovishness weighs on the dollar. There is more room to rise.

Europe is gradually opening up

“Is rising US inflation a reason to buy the dollar? Only if the Federal Reserve is worried, and that is far from being the case. Officials at the world's most powerful central bank have been sticking to the message that the increase in prices is transitory – even if one of their preferred measures of inflation is lifting its head. Atlanta Fed President Raphael Bostic is due to speak out later in the day and he will likely reiterate the Fed's stance.”

“Several countries in the old continent have jabbed more than a third of their population with at least one dose of a COVID-19 vaccine, and infections are falling. Italy announced it would gradually lift its nighttime curfew, a week after Spain ended its state of emergency. Tourism is picking up steam in these countries.” 

“Updated Eurozone Gross Domestic Product figures for the first quarter are set to confirm the old continent's misery – a contraction of 0.6%. Nevertheless, investors are looking forward and will likely cheer the recovery.”

“EUR/USD has surpassed the previous May peak of 1.2180 and the next level to watch is 1.2225, which capped the pair early in the year. More significant resistance awaits at 1.2240, which was the high point in February.” 

“Support awaits at 1.2150, which was the high point in April. It is followed by 1.2105 and 1.2075.”