- EUR/USD adds to Tuesday’s losses and revisits 1.2060.
- The rebound in the dollar weighs on the pair.
- US Retail Sales, FOMC Minutes come up next in the docket.
The single currency extends the selling mood and drags EUR/USD to fresh weekly lows in the vicinity of 1.2060.
EUR/USD offered on USD-strength, looks to data
EUR/USD sheds ground for the second session in a row on Wednesday and revisits the area of multi-day lows around 1.2060.
The sudden improvement in the mood surrounding the greenback forced the pair to recede from Tuesday’s weekly peaks around 1.2170, as investors favoured the buck amidst the moderate climb in yields of the US 10-year benchmark to levels last seen a year ago well above 1.30%.
In the meantime, the reflation/vaccine trade coupled with the strong economic rebound expected in the global economy in the second half of the year remain the exclusive driver of the pair’s price action as well as the rest of the risk complex.
Data wise in Euroland, the yearly Construction Output figures are only due ahead of key releases across the pond: Retail Sales, Industrial Production and the FOMC Minutes.
What to look for around EUR
EUR/USD was rejected once again from the 1.2160/70 region, shifting the trade back to the prevailing consolidative range. However, the constructive outlook for the pair remains unaltered in the longer run and is always supported by prospects of the reflation trade, hopes 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 in Euroland this week: ECB Accounts (Thursday) and German, EMU flash PMIs on Friday.
Eminent issues on the back boiler: EUR appreciation could trigger ECB verbal intervention, always on inflation issues. EU Recovery Fund. Huge long positions in the speculative community.
EUR/USD levels to watch
At the moment, the index is losing 0.23% at 1.2078 and faces the next support at 1.2065 (weekly low Feb.17) followed by 1.1989 (100-day SMA) and finally 1.1952 (2021 low Feb.5). On the other hand, a break above 1.2169 (weekly high Feb.16) would target 1.2173 (23.6% Fibo of the November-January rally) en route to 1.2189 (weekly high Jan.22).
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