- EUR/USD clinched new 7-week highs near 1.2050.
- The dollar sell-off bolsters the upside in the pair so far.
- Investors’ attention seen shifting to the ECB event (Thursday).
The euro cannot have a better start of the week. Indeed, the single currency saw its buying interest exacerbated on Monday and pushed EUR/USD further north of the psychological 1.2000 yardstick, clinching at the same time new multi-week highs.
EUR/USD meets resistance near 1.2050
EUR/USD adds to Friday’s gains and finally leaves behind the 1.2000 barrier on Monday. The strong advance, however, has so far met initial resistance in the mid-1.2000s, where sits the 100-day SMA.
The initial pessimism around the dollar dragged the US Dollar Index (DXY) to fresh lows in the proximity of the 91.00 mark, albeit managing to regain some composure soon afterwards.
The moderate retracement in the buck reflected the initial apathetic trade in US yield, with the 10-year benchmark navigating the 1.55% area before staging a bull run to the 1.615 region.
Nothing scheduled in the US docket on Monday, while the Current Account surplus in the euro area widened to â‚¬13.3 billion in February.
Moving forward, investors are likely to remain cautious ahead of the ECB event on Thursday, while FOMC members entered into the usual communication blackout period ahead of the Federal Reserve gathering on April 28.
What to look for around EUR
EUR/USD met initial resistance in the 1.2050 zone so far. The recent move higher in the pair has been sustained by the renewed offered bias in the dollar along with the investors’ shift to the growth prospect in Europe now that the vaccine campaign appears to have gained some serious pace. In addition, solid results from key fundamentals and the improvement in the sentiment in the euro area as of late also appear to bolster the momentum surrounding the single currency.
Key events in the euro area this week: ECB interest rate decision, President Lagarde’s press conference, European Commission advanced Consumer Confidence (Wednesday) – Flash April PMIs (Friday), ECB Lagarde speech.
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 0.34% at 1.2022 and faces the next hurdle at 1.2048 (monthly high Apr.19) followed by 1.2243 (monthly high Feb.25) and finally 1.2349 (2021 high Jan.6). On the other hand, a breach of 1.1906 (200-day SMA) would target 1.1762 (78.6% Fibo of the November-January rally) en route to 1.1704 (2021 low Mar.31).