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  • EUR/USD resumes the upside following Monday’s pullback.
  • German trade surplus expanded to €16.1 billion in December.
  • US NFIB Index, JOLTs Job Openings, Fed’s Bullard next on tap.

The European currency regains the smile and pushes EUR/USD closer to the key 1.2100 mark on turnaround Tuesday.

EUR/USD up on USD-selling, risk appetite

EUR/USD quickly leaves behind Monday’s small downtick and resumes the recovery from last week’s yearly lows in the mid-1.1900s. The key 1.2100 mark has now become the next target of relevance.

The resumption of the upside momentum in EUR/USD comes amidst renewed weakness surrounding the buck, the corrective downside in US yields and the generalized bias towards the risk complex.

Earlier in the euro docket, the German trade surplus improved to €16.1 billion during December. On Monday, Chief Lagarde reiterated the ultra-accommodative stance from the ECB amidst the persistent lack of upside traction of the inflation in the region. Later on Tuesday, ECB’s P.Lane will participate in a virtual panel discussion at the Irish Fiscal Advisory Council conference.

Data across the pond will include the NFIB Index, the JOLTs Job Openings, the weekly API report and the speech by FOMC’s J.Bullard.

What to look for around EUR

EUR/USD seems to have met decent contention in the YTD lows around 1.1950 (February 5). The ongoing bounce off that area follows the constructive outlook for the pair in the longer run and is always supported by prospects of a strong recovery in the region (and abroad), which is in turn underpinned by extra fiscal stimulus by the Fed and the ECB along with hopes of an acceleration in the vaccine rollout. 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 this week in Euroland: Lagarde speaks on Wednesday. German final January CPI (Wednesday).

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

EUR/USD levels to watch

At the moment, the index is gaining 0.41% at 1.2094 and a break above 1.2124 (55-day SMA) would target 1.2173 (23.6% Fibo of the November-January rally) en route to 1.2189 (weekly high Jan.22). On the other and, immediate support emerges at 1.1952 (2021 low Feb.5) seconded by 1.1887 (61.8% Fibo of the November-January rally) and finally 1.1699 (200-day SMA).