EUR/USD climbs to multi week highs at 1.1380 on broad USD weakness

• Consumer confidence in Germany remains steady in March.
• Mixed macroeconomic data and falling bond yields weigh on the USD.
• US Dollar Index slides to 3-week lows.

The EUR/USD pair, which was able to post modest gains on Monday, continued to push higher on Tuesday and reached its highest level since February 6 at 1.1380 in the NA session before going into a consolidation phase. As of writing, the pair was up 0.13% on a daily basis at 1.1373.

Earlier today, the data from Germany showed that the Gfk Consumer Confidence Index stayed unchanged at 10.8 in March and came in line with the market consensus to help the shared currency stay resilient against its rivals. On the other hand, European Central Bank Governing Council member Philip Lane argued that the labour market in the EU was still strong and added that they were observing upward pressure in wages. Despite these euro-positive headlines, however, the pair’s daily rally gained traction in the second half of the day and was primarily driven by the ongoing USD sell-off.

Pressured by the falling US Treasury bond yields and the day’s mixed macroeconomic data releases, the US Dollar Index extended its slide and touched its lowest level in three weeks at 96.15. Testifying before the Congress, FOMC Chairman Jerome Powell explained that the Fed was in no rush to make a judgement on policy and reiterated that slowing economic growth was the predominant risk on the economy.

Technical outlook  

With today’s advance, the RSI indicator on the daily chart turned north above the 50 mark, suggesting that the pair is gathering bullish momentum. The pair could face the initial resistance in the 1.1380/90 area (100-DMA/50-DMA) and target 1.1440 (Feb. 5 high) and 1.15000 (psychological level) next. On the downside, supports are located at 1.1335 (20-DMA), 1.1275 (Feb. 19 low) and 1.1230 (Feb. 15 low).