- EUR/USD reverses the initial drop and retakes 1.2160.
- The dollar fades the initial optimism and returns below 91.00.
- Investors’ attention shifts to the ECB event on Thursday.
After bottoming in 3-day lows near 1.2080, EUR/USD manages to regain traction and is now back around the mid-1.2100s.
EUR/USD keeps targeting the 1.2200 mark
EUR/USD returns to the upper end of the recent range and leaves behind the initial selling bias, which saw the pair breach the key support at 1.2100 the figure.
In fact, the initial sentiment favouring the buck runs out of steam and gives way to the resumption of the demand for the riskier assets despite pandemic concerns, Brexit jitters and renewed US-China effervescence.
Looking at the euro calendar, the German Industrial Production surprised to the upside and expanded 3.2% MoM in October. In the same line, the Sentix index – which tracks the Investor Confidence – came in at -2.7 for the month of December (from -10).
Across the pond, the only release later on Monday will be the October’s Consumer Credit Change.
What to look for around EUR
The upside momentum in EUR/USD faltered in the proximity of the 1.22 barrier in past sessions, always against the backdrop of the favourable context in the risk complex. In the very near-term, EUR/USD appears supported by prospects of a strong recovery in the region along with the increasing likelihood of extra stimulus in the US. Risks to this positive view emerge from the potential political effervescence around the EU Recovery Fund and increasing chances of further ECB easing to be announced as soon as at the December meeting.
EUR/USD levels to watch
At the moment, the pair is gaining 0.30% at 1.2157 and a breakout of 1.2177 (2020 high Dec.4) would target 1.2413 (monthly high Apr.17 2018) en route to 1.2476 (monthly high Mar.27 2018). On the downside, the next support emerges at 1.1920 (high Nov.9) seconded by 1.1800 (low Nov.23) and finally 1.1745 (weekly low Nov.11).
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