EUR/USD: Upside favored as S&P 500 VIX signals risk-on

EUR/USD looks north as the Cboe VIX drops below 20 in a dollar-negative manner.
The decline in Wall Street's fear index signals risk-on.
The US fiscal stimulation expectations also favor downside in the dollar.

Omkar Godbole FXStreet Contributor

EUR/USD is on the rise on the first trading day of the week and could challenge a crucial hurdle, with Wall Street's fear gauge signaling a continued rally in stocks.

The pair is currently trading 0.13% higher on the day at 1.2134. It has established 1.2149 and 1.2081 as levels to beat for bulls and bears, respectively, in the past two weeks.

A breakout looks likely, as the Cboe Volatility Index, also known as Wall Street's "fear gauge," ended below 20 on Friday to print the lowest daily close since the March 2020 crash.

According to FundStrat's Tom Lee, the VIX's decline indicates risk-on and could draw more Systematic and quantitative investment funds to equity markets. That could lead to a more profound decline in the anti-risk US dollar.

The greenback has become a preferred haven since the March crash and has taken a beating against major currencies alongside the record rally in the equities seen over the past ten months.

Also supporting the bullish case in the EUR are strengthening expectations for US fiscal stimulus. The weak US Nonfarm Payrolls released on Feb. 5 crystallized support for President Joe Biden's $1.9 trillion stimulus plan, allowing EUR/USD to recover from sub-1.20 levels to above 1.21 amid the Eurozone's slower vaccine delivery.

Data-wise, the focus today is on the Eurozone Industrial Production data. The market may witness below-average trading volumes on account of the President's Day holiday in the US.

Technical levels

1. R3 1.2196
2. R2 1.2166
3. R1 1.2142
PP 1.2112
1. S1 1.2088
2. S2 1.2058
3. S3 1.2034

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

EUR/USD gathers traction, approaches 1.1800

EUR/USD manages to reverse Tuesday’s pullback, advancing to two-day highs near the 1.1800 hurdle in the latter part of Wednesday’s session. The pair’s decent uptick comes on the back of the modest retracement in the US Dollar, as investors continue to closely follow developments on the trade front and news from the White House in the wake of President Trump’s SOTU speech.

GBP/USD challenges multi-day highs near 1.3530

GBP/USD leaves behind the previous day’s decline and regains fresh upside traction on Wednesday, surpassing the 1.3500 barrier in a context of a modest decline in the Greenback and a generalised improved mood in the risk-linked space. Meanwhile, the US tariff narrative continues to dictate the mood among market participants after Presidet Trump’s SOTU speech failed to surprise markets.

Gold remains bid and close to $5,200

Gold buyers are returning to the fold on Wednesday, targeting the $5,200 area and possibly beyond, after Tuesday’s corrective dip from monthly highs. The rebound in the precious metal comes as the US Dollar loses traction, with Trump’s SOTU speech offering little fresh direction and AI-related nerves continuing to ease.

Crypto Today: Bitcoin, Ethereum, XRP test rebound strength as ETF inflows return

Bitcoin, Ethereum and Ripple are gaining traction at the time of writing on Wednesday, amid persistent market doldrums. The Crypto King is up over 2% intraday, trading above $65,000 from the day’s opening of $64,058.

Nvidia earnings to influence AI trade and broader market sentiment

For the last three years, Nvidia has been the engine of the AI boom, and now Wall Street is watching to see whether that momentum can keep going. High-growth stocks have been struggling to maintain their bullish trend in 2026.

Cosmos Hub Price Forecast: ATOM rebounds slightly, bearish outlook remains intact

Cosmos Hub (ATOM) price rebounds, trading above $2.05 at the time of writing on Wednesday, after undergoing a sharp correction since last week. Weakening on-chain and derivatives data support a bearish outlook, while technical analysis remains unfavorable.