Home EUR/USD trims intraday gains above 1.2000, ECB eyed
FXStreet News

EUR/USD trims intraday gains above 1.2000, ECB eyed

  • EUR/USD retreats from intraday top but prints biggest daily gains since Monday.
  • Bullish BOC teases ECB hawks even as the bank isn’t likely to alter current monetary policy.
  • Market sentiment dwindles amid mixed clues concerning covid, economic recovery hopes and geopolitics.
  • US second-tier data, including weekly jobless claims, also become the key.

EUR/USD trims intraday gains even as the latest pullback to 1.2040 tests bulls while heading into Thursday’s European session. Although the US dollar bounce could be cited for the latest drop in the currency major, traders remain optimistic ahead of the key ECB. The reason could be traced from the previous day’s Bank of Canada (BOC) monetary policy meeting as well as Dutch bullish bias.

Will ECB’s Knot follow the Canadian path?

Following the BOC’s 25% tapering of weekly bond purchase, Dutch central banker Klaas Knot has the reason to reiterate his firm support for dialing back some of the easy money. However, ECB President Christine Lagarde and Vice President Luis de Guindos could confront the move amid cautious optimism.

It should, however, be noted that hints of trimming the bond purchase in June will be watched closely although the bloc’s central bank is expected to maintain status-quo. In doing so, the policymakers can praise the anticipated economic recovery as the vaccinations improve and German bonds remain pressured.

Read:  European Central Bank Preview: Five reasons for Lagarde to lift the euro

Ahead of the event, US Treasury yields refresh the weekly low, before bouncing back, while stock futures trim the early Asian losses. Behind moves could be the covid woes in Asia and the recent geopolitics concerning Russia, the US and China. Additionally confusing the traders are the hopes of the strongest US economic growth since 1984 and upbeat option market results.

Against this backdrop, the US dollar index (DXY) remains pressured towards the seven-week low, marked on Monday, despite the latest U-turn from the intraday low.

Other than the risk catalysts and the ECB, US figures on weekly Jobless Claims and monthly data on housing, as well as Chicago Fed National Activity Index, should also be given importance while forecasting near-term EUR/USD moves. Given the latest catalysts backing the regional currency’s upside, any disappointment will not be taken lightly and hence the pair buyers should remain cautious.

Technical analysis

Bulls need a clear upside break of 100-day SMA level near 1.2055 to attack the 1.2115-20 resistance confluence comprising March month’s top and the upper line of a monthly rising channel. Alternatively, the quote’s downside break of the monthly rising channel’s support around 1.2020 will be questioned by the 1.2000 threshold and tops marked during March 11-18 around 1.1990.

 

FX Street

FX Street

FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions.