- EUR/USD hits highest level since Jan. 1 on broad-based USD weakness.
- Heigtened expectations for more US fiscal stimulus overshadow Eurozone’s vaccine delay.
- A continued rise in bond yields could play spoilsport.
EUR/USD has crossed above a crucial technical resistance as markets continue to offer US dollars despite concerns Eurozone’s economic recovery could lag behind the US due to slow vaccine rollout.
The pair closed above 1.2104 on Tuesday, marking a breakout above the 38.2% Fibonacci retracement of the decline from 1.2349 to 1.1952. At press time, the pair is trading near 1.2127, the highest level since Feb. 1.
According to TD Securities, the vaccine race and the starting mobility base rates offer the USD a distinct advantage over its peers over the following months.
Trade insurance group Euler Hermes said last week that the average daily vaccination rates across major European Union economies stand at just 0.12% of the population. That’s four times lower than in Britain and the United States. Besides, major European economies are still negotiating which projects will get funding from a 750 billion-euro joint recovery fund, as recently noted by Reuters.
Even so, EUR/USD is gaining ground. Two of the previous three daily candles have very small or no wicks, a sign of strong bullish sentiment.
Investors look to be selling the greenback in hopes of more US fiscal stimulus. Friday’s Nonfarm Payrolls missed estimates by a big margin, reviving concerns about the economic recovery and crystalizing support for President Joe Biden’s $1.9 trillion stimulus plan.
However, the greenback may draw haven bids if stock markets drop on a continued rise in bond yields. The US 30-year yield rose to a 12-month high of 2% on Tuesday.
Data-wise, the focus will be on the US Consumer Price Index for January, scheduled for release at 13:30 GMT.
Technical levels
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