EUR/USD: Bullish arguments to materialize to gains later in the day

EUR/USD has been struggling to recover after safe-haven flows boosted the dollar last week. However, there is room to recover as optimism about Biden’s first moves, German politics and vaccines may boost sentiment, FXStreet’s Analyst Yohay Elam briefs.

See – EUR/USD: The next stop is at 1.2050 – OCBC

Key quotes

“President-elect Joe Biden enters the White House on Wednesday and is set to advance his $1.9 trillion stimulus plan – and also a massive vaccination campaign. Biden aims to have 100 million Americans inoculated within his first 100 days.” 

“Fed Chair Jerome Powell, laid his foot down last week by ending talk of an early tapering of bond buys, which had boosted the greenback beforehand.”

“Trouble continues brewing in Italy, where Prime Minister Giuseppe Conte faces votes of no-confidence. On the other hand, Armin Laschet, a moderate, has been elected leader of Chancellor Angela Merkel’s CDU Party. The pro-European leader of North-Rhine Westphalia is in pole position to become the next leader of the continent’s largest country, a prospect cheered by markets.” 

“China reported an annualized growth rate of 6.5% in the fourth quarter of 2020 – being the only major economy to have grown last year. Demand from the world’s second-largest economy is also positive for European goods and adverse for the safe-haven dollar.”

“Some support is at the daily bottom of 1.2065, which is also the lowest since mid-December. It is followed by 1.2040, a stepping stone on the way up from back then. Some resistance is at the round 1.21 level, followed by 1.2125, the former triple bottom.”