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EUR/USD is trading below 1.2150 amid the rush to the dollar and despite Europe’s accelerating vaccination campaign. Perhaps not all euro bulls have begun the week with fresh energies, however, the shared currency is set to resume its gains for three reasons, as FXStreet’s Analyst Yohay Elam lays out.  

Weaker US inflation fears

“China reported an annual increase of 17.7% in April’s Retail Sales data, substantially below an increase of roughly 25% projected. There is no commodity ‘supercycle’ without China – a rethink about inflation could embolden doves at the Fed and soften the hawks. Federal Reserve Vice-Chair Richard Clarida and several of his colleagues are set to speak out later in the day and they will likely repeat their message that inflation is transitory. That could weigh on the dollar.”  

“The old continent has been accelerating its vaccination campaign, reaching over a third of the population with at least one dose. Moreover, the campaign is bearing fruit, pushing infections sharply lower. That is allowing countries to open up and visitors from abroad to revive the beaten tourism industry.”  

“The 4-hour chart is showing that momentum has turned positive. Moreover, the pair trades above the 50 and 100 simple moving averages (SMAs). Some resistance awaits at 1.2150, which was the peak in late April and also on Monday. It is followed by 1.2180, which capped EUR/USD last week. Some support is at the daily low of 1.2125, followed by 1.2110, which held it down last week.”

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