EUR/USD to see an extended upswing though the broader downtrend is intact

EUR/USD has been advancing as the dollar retreats alongside yields. Trump’s distraction could push the euro even higher in the short-term, Yohay Elam, an Analyst at FXStreet, reports. 

Key quotes

“President Joe Biden is urging Congress to approve his original plan worth $1.9 trillion but is also willing to compromise – mostly with members of his party, rather than Republicans. Moderates and liberals are at odds over eligibility for stimulus checks. Investors seem disinterested in these details and simply want a quick and smooth approval in Congress, regardless of which side wins and what the GOP thinks.” 

“Trump's future is of no interest to markets, but the distraction may delay stimulus in turn. In turn, investors may continue buying bonds in anticipation that the relief package would be delayed and eventually be smaller. A drop in yields would be adverse for the dollar.” 

“For the euro, Trump's trial is a welcome distraction from the old continent's own woes, namely its frustratingly slow vaccination campaign. Europe's meager immunization effort is already weighing on sentiment, as seen in the Ssentix Investor Confidence for February which dropped to -2 points, reflecting pessimism.”

“Euro/dollar has jumped above the 1.2050 level – a clear separator of ranges – and has broken above the 50 and 100 Simple Moving Averages on the 4-hour chart, a bullish sign. Alongside upside momentum, there seems to be more room for gains.”