EUR/USD in multi-week highs near 1.1980 ahead of Lagarde, Powell
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EUR/USD in multi-week highs near 1.1980 ahead of Lagarde, Powell

  • EUR/USD adds to recent gains well above 1.1900.
  • Lower US yields put the dollar under extra downside pressure.
  • EMU’s Industrial Production, ECB-speak next of note in the docket.

The buying interest around the single currency remains well and sound and pushes EUR/USD to fresh 4-week highs near 1.1980.

EUR/USD now targets the 1.2000 level

EUR/USD advances for the third consecutive session on Wednesday, always on the back of the persistent and renewed weakness surrounding the dollar.

In fact, lower US yields and the investors’ shift away from the US economic recovery narrative have been sustaining the recent fresh inflows into the European currency, which are in turn propped up by expectations of a strong recovery in the Old Continent.

Earlier in the session ECB’s Vice-President L. De Guindos once again warned against the risks of a premature withdrawal of the current monetary stimulus.

Later in the euro docket, February’s Industrial Production in the broader Euroland is due along with speeches by ECB’s President C.Lagarde and Board members Schnabel, Panetta and Fernandez-Bollo.

Across the pond, Powell’s speech at the Economic Club of Washington will take centre stage later in the NA session.

What to look for around EUR

EUR/USD keeps pushing higher and gradually approaches the psychological 1.2000 barrier in response to the increasing selling pressure in the dollar and fresh optimism on the economic rebound in the euro area now that the vaccine rollout appears to have gained some serious pace. Solid results from key fundamentals as of late also appear to bolster this shift in the investors’ view.

Key events in the euro area this week: Industrial Production, Lagarde speech (Wednesday) – German final March CPI (Thursday) – Eurogroup meeting, EMU final CPI (Friday).

Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the vaccine rollout. Probable political effervescence around the EU Recovery Fund.

EUR/USD levels to watch

At the moment, the index is gaining 0.09% at 1.1957 and faces the next hurdle at at 1.1974 (monthly high Apr.14) followed by 1.1989 (weekly high Mar.11) and finally 1.2000 (psychological level). On the other hand, a breach of 1.1704 (2021 low Mar.31) would target 1.1602 (monthly low Nov.4) en route to 1.1570 (2008-2021 support line).

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