- EUR/USD is gaining momentum after managing to hold above 1.1400.
- Dollar weakness in the market boosts the pair.
- Next key data: US inflation on Thursday.
EUR/USD gained momentum in the last hour and climbed to 1.1445, marking a new high for the day. In this way, the euro cuts the losses of the current week and seems to be gaining strength again, taking advantage of the general decline in the dollar.
The greenback weak on Wednesday in the face of a moderate decline in Treasury bond yields and a rise in equity markets. Wall Street futures point to a positive opening with increases of 0.75% on average, while in Europe the main markets rise around 1.15%. The US 10-year bond yields 1.92%.
Does the rally restart?
The EUR/USD is bouncing after the correction after last week’s peak at the 1.1480/85 area, the new February high and where the January high is as well. The rise to said level occurred due to the change in the expectations of the European Central Bank, after the last meeting of the Governing Council where it was not denied that interest rates could rise this year. Subsequent comments from ECB officials went in the same direction, cementing the euro’s rally. Even today, statements by Nigel, the president of the Bundesbank, were known in that tune.
Looking ahead to the coming days, comments from ECB and Fed officials may be key for the pair. In terms of data, the most significant will come on Thursday with the US retail inflation report for January, which is expected to show an annual rise from 7% to 7.3%.
For EUR/USD rallies to gain strength, EUR/USD should break recent highs at 1.1480/85 and firm above 1.1500 ideally to enable further rallies. Before that level there is intermediate resistance at 1.1465.
For the next sessions, a return below 1.1420 would take strength from the euro, while if it loses 1.1400, the focus would go back to 1.1370, where a drop below would be a factor that would enable a further pullback, and cast doubt on the possibility of further euro gains.
Technical levels
Source: Fx Street
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