- EUR / USD is moving higher and rises near the 1.2200 level.
- The dollar loses momentum after the strong rally on Wednesday.
- German producer prices were up 0.8% month-on-month and 5.2% year-on-year in April.
The common currency recovers the smile and pushes the EUR / USD pair towards the 1,220 region during the European session on Thursday. At time of writing, the pair is backing slightly towards the 1.2190 region, still positive on the day.
EUR / USD faces the next hurdle at 1.2250
EUR / USD regains part of Wednesday’s retracement, as Bulls Regain Control Following Wednesday’s Moderate Pullback Following FOMC Minutes Release.
In fact, the dollar saw its demand accelerate after Wednesday’s FOMC minutes noted that “some members” lean toward starting the bond-buying program phase-down process ahead of schedule, considering the current strong recovery of the US economy.
Thursday’s downward correction in the dollar comes in tandem with the slight retreat in US 10-year bond yields from Wednesday’s highs near 1.70%, while the better tone in the yields of the German Bund further contributes to the rise of the euro.
At the beginning of the European session, data has shown that German producer prices rose 0.8% monthly in April and 5.2% over the previous year. Subsequently, the results of construction production and the current account for the euro zone in general will be published.
Across the Atlantic, the focus will be on initial weekly jobless claims and the Philadelphia Fed Manufacturing Index.
What can we expect around the EUR?
EUR / USD found decent resistance in the 1.2250 region earlier in the week, extending the bounce from last week’s lows near 1.2050 and always supported by the strong rebound in 10-year German Bund yields and optimism. pervasive appetite for risk. The pair’s sustained rally also comes in response to investors’ shift towards better growth prospects in the Old Continent now that the vaccination campaign appears to have gained serious pace, along with strong fundamental data from the region.
Key events in the eurozone this week: May Eurozone and Germany PMI and preliminary consumer confidence (Friday).
Eminent Background Issues: Asymmetric economic recovery in the region. Sustainability of the rebound in inflation figures. Progress in the vaccination campaign. Likely political turmoil around the EU Recovery Fund. German elections.
EUR / USD levels
At the time of writing, the EUR / USD pair is gaining 0.17% on the day, trading at 1.2190. The next resistance is at 1.2245 (May 19 high), followed by 1.2300 (round level) and 1.2349 (January 6 high). On the other hand, a break below 1.2051 (May 13 low) would target 1.1985 (May 5 low) en route to 1.1960 (200-day SMA).
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