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EUR/USD has been advancing after US Treasury Secretary nominee Yellen made the case for more stimulus. President-elect Joe Biden is inaugurated later in the day and his first actions in office are set to boost bulls, outweighing ECB worries, FXStreet’s Analyst Yohay Elam briefs.

Key quotes

“The focus is on what Biden does in his first hours and days at the White House. A call to wear face masks and a boost to America’s vaccination campaign would be welcomed while trying to force states to shutter would weigh on markets.” 

“The European Central Bank is set to leave rates unchanged but may warn about the higher exchange rate of the euro. Without cutting rates, any attempt by the ECB to talk down the common currency will likely be futile. However, Bloomberg reported that the ECB could launch a strategy of controlling yield spreads. While lowering returns on European debt may weigh on the euro, it would lower borrowing costs for some governments, a positive development.”

“Germany extended its lockdown through February 14 while Italy’s government survived its political crisis. The common currency is somewhat dragged down by the slow pace of vaccinations, especially as Biden intends to ramp up America’s immunization scheme.”

“Resistance awaits at 1.2180, which capped EUR/USD last week. It is followed by 1.2225, which was the peak back then. Support awaits at the former triple bottom of 1.2125, then by the round 1.21.”