EUR/USD bounces off lows and retest 1.2070

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  • EUR/USD rebounds from lows in the 1.2030/20 band.
  • Flash EMU Consumer Confidence gauge is due later in the session.
  • US Initial Claims, housing data, Fedspeak next in the calendar.

The single currency regains the smile following recent losses and motivates EUR/USD to reclaim the 1.2070 region on Thursday.

EUR/USD looks to USD, data

After two consecutive daily pullbacks, including new lows near 1.2020 on Wednesday, EUR/USD now picks up upside traction and navigates the area of session highs around 1.2070.

The corrective downside in the greenback follows a drop from recent yearly highs of yields of the US 10-year reference, which managed to climb to as high as the 1.33% zone on Wednesday and drop to the current 1.28% neighbourhood afterwards.

In the euro docket, the ECB will publish its financial statements for 2020 along with the Accounts of the January monetary policy meeting. Later on Thursday, the European Commission (EC) will release its preliminary gauge of the Consumer Confidence.

Across the pond, initial attention will be on the weekly Claims seconded by the Philly Fed Index, housing data and the EIA’s report on crude oil supplies.

What to look for around EUR

EUR/USD was rejected once again from the 1.2160/70 region and the subsequent leg lower appears to have met decent contention in the 1.2020 area. The constructive outlook for the pair, however, is expected to remain unchnaged in the longer run, always supported by the reflation/vaccine trade and hopes of a strong recovery in the region. 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.

Key events in Euroland this week: ECB Accounts, flash Consumer Confidence (Thursday) and German, EMU flash PMIs on Friday.

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

EUR/USD levels to watch

At the moment, the index is gaining 0.29% at 1.2068 and a breakout of 1.2169 (weekly high Feb.16) would target 1.2173 (23.6% Fibo of the November-January rally) en route to 1.2189 (weekly high Jan.22). On the downside, the next support is located at 1.2023 (weekly low Feb.17) followed by 1.1991 (100-day SMA) and finally 1.1952 (2021 low Feb.5).

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