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  • EUR/USD extends the recent consolidation above 1.2100.
  • The dollar remains weak and supports gains in the pair.
  • US Initial Claims, Fed’s Monetary Policy Report next in the docket.

The upbeat tone around the single currency remains well and sound for yet another session and motivates EUR/USD to post decent gains in the 1.2130 region.

EUR/USD focused on data, risk trends

EUR/USD looks to extend the weekly upside, although it seems a tough resistance has emerged around 1.2150 for the time being. This hurdle is also reinforced by the proximity of the 55-day SMA, today at 1.2133.

In the meantime, the buying impetus in the risk complex appears to be taking a breather in the second half of the week and favours some consolidation in the global assets.

Earlier in the session, the ECB’s Villeroy stressed that climate is linked to the core of the central bank’s mandate and ruled out that the bank’s balance sheet greening does not mean extra easing.

In the domestic docket, the European Commission will publish its Economic Forecast. Across the pond, the usual weekly Claims are due ahead of the semi-annual Monetary Policy Reportt by the Federal Reserve.

What to look for around EUR

EUR/USD seems to have met decent contention in the YTD lows around 1.1950 (February 5). The ongoing bounce off that area follows the constructive outlook for the pair in the longer run and is always supported by prospects of the reflation trade, hopes of a strong recovery in the region (and abroad), which is in turn underpinned by extra fiscal stimulus by the Fed and the ECB along with hopes of an acceleration in the vaccine rollout. In addition, real interest rates continue to favour the euro area vs. the US, which is also another factor supporting the EUR along with the huge, long positioning in the speculative community.

Eminent issues on the back boiler: EUR appreciation could trigger ECB verbal intervention, always on inflation issues. EU Recovery Fund. Italian politics. Huge long positions in the speculative community.

EUR/USD levels to watch

At the moment, the index is gaining 0.06% at 1.2124 and a break above 1.2144 (weekly high Feb.10) would target 1.2173 (23.6% Fibo of the November-January rally) en route to 1.2189 (weekly high Jan.22). On the other and, immediate support emerges at 1.1952 (2021 low Feb.5) seconded by 1.1887 (61.8% Fibo of the November-January rally) and finally 1.1712 (200-day SMA).