Fresh demand for the greenback has sent EUR/USD below 1.22 and critical support at 1.2125 is again at risk. Talk of Fed tapering, America’s vaccination advantage and US stimulus are set to boost the dollar, Yohay Elam, an Analyst at FXStreet, reports.
See – EUR/USD to experience further corrective weakness – Credit Suisse
Key quotes
“Fed Vice-Chair Richard Clarida and Governor Lael Brainard will be speaking later in the day. Any further mention of tapering may support the dollar – even though markets are waiting for a speech by Jerome Powell, the Fed Chairman.”
“The new administration is taking office next Wednesday and Treasury Secretary nominee Janet Yellen has confirmation hearings scheduled for Tuesday, raising hopes of immediate action. Investors expect Biden to announce a package worth around $3 trillion, but the scope is still to be seen.”
“The US has an advantage over Europe on the vaccination front. Washington authorized releasing vaccines to anyone aged 65 or older. The world’s largest economy administered at least one dose to nearly 3% of the population while figures in European countries are barely around 1%.”
“Euro/dollar is still holding onto the 200 SMA and more importantly, the critical support line at 1.2125. That level is a triple bottom after cushioning EUR/USD twice in December and now in early January as well. Below 1.2125, the next levels to watch are 1.21, 1.2075, and 1.2160.”
“Resistance awaits at the daily high of 1.2225, followed by 1.2240, which is where the 50 SMA hits the price.”
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