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News about the COVID-19 vaccine and Biden’s nomination of former Fed chair, Janet Yellen for Treasury Secretary has supported the positive market mood, weighing on the safe-haven USD according to the FX Analysis team at Rabobank. The euro, however, is facing hurdles of its own, which will cap upside attempts.

Key quotes

“Yesterday, the currency pair covered a sizeable range.  Having failed to convincingly hold above the 1.19 level, EUR/USD retreated to the 1.18 area before climbing back to a high in the region of 1.1894 today.”

“The repeated failure of the currency pair to move above the 1.19 level comes at a time when fundamentals factors may also be putting some hurdles in front of the EUR.”

“Yesterday the ECB’s Rehn criticised the EU’s stand-off over the 2021/27 budget which could result in delays dispersing the Recovery Fund.  Additionally, it seems very likely that the ECB will be increasing policy stimulus at next month’s meeting.  This his may give EUR bulls pause for thought.  We would favour selling any further rallies towards EUR/USD 1.19 in the near-term.” 

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