- EUR/USD’s upside surpasses the 1.1200 mark on Wednesday.
- Risk-on sentiment remains firm and sustains the rally in the pair.
- German Unemployment Change rose by 238K in May.
The generalized optimism surrounding the riskier assets is lending extra support to the single currency and lifts EUR/USD to new peaks further north of 1.1200 the figure.
EUR/USD underpinned by risk-on mood
The rally in EUR/USD stays well and sound for yet another session on Wednesday, prolonging the upside to the vicinity of 1.1230 and trading at shouting distance from December 2019 peaks near 1.1240.
Hopes of the gradual return to the normal activity in economies in the Old Continent and across the pond have reignited the sentiment towards the risk-associated complex and fuelled further the idea that the coronavirus pandemic could be already behind us.
In addition, market participants found another reason to keep favouring the riskier assets after German Services PMI came in at 32.6 for the month of May, surpassing estimates and more than doubling the previous reading. Results in the same indicator in France, Spain, Italy and the broader Euroland also exceeded expectations. Still in Germany, the jobless rate ticked higher to 6.3% in May while the Unemployment Change increase more than forecasted by 238K.
Data releases coming up next include Producer Prices in the euro area, while the ISM Non-Manufacturing, Factory Orders and the ADP report will take centre stage in the US docket.
What to look for around EUR
EUR/USD has move above the 1.1200 mark against the backdrop of the solid mood in the risk universe. As usual, the weakness in the dollar and the positive prospects following the gradual re-opening of economies around the world keep underpinning the investors’ preference for riskier assets. In addition, Germany is planning to pump an extra €100 billion into its economy, which adds to the recently proposed €750 billion aid packaged by the European Commission (EC). Further support for the euro lies as well in the solid position of the region’s current account.
EUR/USD levels to watch
At the moment, the pair is advancing 0.26% at 1.1198 and a break above 1.1227 (weekly/monthly high Jun.3) would target 1.1239 (monthly high Dec.31 2019) en route to 1.1391 (monthly high Jun.13 2019). On the other hand, immediate contention emerges at 1.1011 (200-day SMA) followed by 1.0902 (55-day SMA) and finally 1.0870 (weekly low May 26).
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