- EUR/USD pushes higher and breaks above 1.2200.
- German 10-year yield plummet to 2-month lows near -0.26%.
- The dollar gains downside traction below 90.00.
The increasing selling pressure in the greenback helps EUR/USD to advance past the 1.2200 mark and clinch at the same time new weekly highs.
EUR/USD also helped by GBP-selling
EUR/USD trades in multi-day peaks beyond 1.2200 the figure on the back of renewed selling pressure in the US dollar, which is in turn sustained by a move in yields of the US 10-year note to the sub-1.50% level for the first time since early March. German 10-year yields also trade in multi-week lows around -0.26%.
Further demand for the shared currency (in detriment of the sterling) comes from the strong upside in EUR/GBP following the resurgence of Brexit jitters.
Earlier in the euro docket, the German trade surplus expanded to €15.9 billion in April (from €14.3 billion) and the Current Account surplus shrank to €21.3 billion during the same period (from €30.0 billion).
Data wise in the US docket, the MBA’s Mortgage Applications dropped 3.1% from the week earlier, while Wholesale Inventories and the weekly EIA’s report are both next on tap.
What to look for around EUR
Last week’s sell-off in EUR/USD met solid support around the 1.2100 neighborhood. The subsequent bounce managed to re-test the key 1.2200 level, leaving the perspective on the positive side at least in the very near-term. Looking at the broader scenario, the constructive perspective in the European currency stays in place and appears propped up by auspicious results from fundamentals in the bloc coupled with higher morale, prospects of a strong rebound in the economic activity in the Old Continent in the months to come and the investors’ appetite for riskier assets.
Key events in the euro area this week: ECB meeting (Thursday).
Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the vaccine rollout. Probable political effervescence around the EU Recovery Fund. German elections. Investors’ shift to European equities.
EUR/USD levels to watch
So far, spot is gaining 0.31% at 1.2210 and faces the next up barrier at 1.2266 (monthly high May 25) followed by 1.2300 (round level) and finally 1.2349 (2021 high Jan.6). On the flip side, a break below 1.2063 (23.6% Fibo retracement of the November-January rally) would target 1.2051 (weekly low May 13) en route to 1.1985 (monthly low May 5).
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