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Analysts at Citibank point out that escalating US-China tensions risks and US political uncertainties weighed on the US dollar. According to them, the slide of the US Dollar index below 96 supported the euro. 

Key Quotes:

“EA ‘break-up’ risk premia has now markedly been reduced. The key inflection point for EA risk premia was the good news on the EU recovery fund. Euro denominated risk assets have traded much more robustly. Besides, the ECB also upsized and lengthened its PEPP to defend its mandate. It is synchronised monetary and fiscal support that have proven to yield the most “positive“ results during the recovery, favoring EUR.”

“EURUSD has finally got a weekly close over the 200w MA for the first time since June 2019, this break coming with an impulsive rally. Good resistance at 1.1419-22 has also given way decisively, opening up the way for a test of 1.1815.”