- EUR/USD trades closer to the 1.20 barrier on Tuesday.
- EMU’s advanced CPI contracted 0.3% MoM in November.
- Fed’s Powell, ISM Manufacturing in the limelight later in the NA session.
EUR/USD regains buying interest and advances to the boundaries of the psychological barrier at 1.20 the figure on Tuesday.
EUR/USD focused on Fed, data
EUR/USD is once again testing waters near the 1.20 yardstick in the first half of the week, extending the uptrend sparked in early November.
The risk complex continues to benefit from the weaker dollar, always on the back of rising optimism regarding a strong economic recovery in the medium-term. This investors’ view remains underpinned by the development of an effective COVID-19 vaccine in the upcoming months and is fuelled further by the probability of extra US stimulus, likely to be announced in the near-term.
In the euro docket, the German jobless rate ticked lower in November while preliminary inflation figures in the broader euro area see the headline, core CPI contracting at a monthly 0.3% during last month.
Across the pond, Fed’s Powell will testify before the Senate, while the ISM Manufacturing will take centre stage in the NA session seconded by speeches by FOMC’s Brainard, Daly and Evans.
What to look for around EUR
EUR/USD’s rally briefly surpassed the 1.20 mark on Monday and leaves the door open to a potential test of the 2020 highs near 1.2010 (September 1), always against the backdrop of a favourable atmosphere in the risk complex. In the very near-term, EUR/USD appears supported by prospects of a strong recovery in the region along with the increasing likelihood of extra stimulus in the US. Risks to this positive view emerge from the potential political effervescence around the EU Recovery Fund and increasing chances of further ECB easing to be announced as soon as at the December meeting.
EUR/USD levels to watch
At the moment, the pair is gaining 0.52% at 1.1984 and a break above 1.2003 (monthly high Nov.30) would target 1.2011 (2020 high Sep.1) en route to 1.2032 (23.6% Fibo of the 2017-2018 rally). On the flip side, immediate contention emerges at 1.1800 (low Nov.23) followed by 1.1745 (weekly low Nov.11) and finally 1.1709 (Fibo level of the 2017-2018 rally).
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