- EUR / USD finds solid resistance at the 1.2150 region.
- Panetta, and Lagarde, of the ECB, will speak later in the day.
- The US January CPI and a speech by Powell stand out in the American session.
The common currency extends the optimistic sentiment so far this week and lifts EUR / USD to weekly highs around 1.2150 region, where decent resistance appears to have appeared.
EUR / USD strengthens on risk appetite, focus is on ECB and data
EUR / USD adds spreads Tuesday’s gains and seeks to consolidate the recent breakout of the key region at 1.2100, always supported by strong sentiment around riskier assets.
The moderate selling of the US dollar It has been sustaining the rally in the EUR / USD pair from the annual lows reached last week near 1.1950, with the downward movement in US yields and the rebound in reflation trading.
Regarding the eurozone data, Final German inflation figures showed that consumer prices measured by the CPI rose 0.8% monthly during January, coinciding with the preliminary readings. Later on Wednesday, Christine Lagarde, President of the ECB, will participate in an event organized by The Economist and Board member Fabio Panetta will participate in an online seminar.
Data from the other side of the Atlantic present the publication of the US CPI and underlying CPI. also for the month of January. Additionally, Fed Chairman Jerome Powell is due to speak at an event on the “State of America’s Labor Market.”
What can we expect around the EUR?
EUR / USD appears to have found decent support at the yearly lows, around 1.1950 reached on February 5. The current rebound in that region follows the constructive outlook for the pair in the long term, supported by expectations of reflation trading, hopes of a strong recovery in the region (and abroad), which in turn is supported by a Additional fiscal stimulus from the Fed and the ECB along with hopes for an acceleration in the launch of coronavirus vaccines. In addition, real interest rates continue to favor the euro area against the US, which is also another factor supporting the common currency along with the huge long-term positioning in the speculative community.
This week’s key events in the eurozone: Lagarde will speak on Monday and Wednesday. The German final CPI for January is published on Wednesday.
Eminent Background Topics: The appreciation of the EUR could trigger a verbal intervention by the ECB on inflation problems. The EU Recovery Fund. Italian politics. Large bullish positions in the speculative community.
EUR / USD technical levels
At the time of writing, the EUR / USD pair is gaining 0.02% on the day, trading at 1.2119. A break above 1.2144 (Feb 10 high) would target 1.2173 (23.6% Fibonacci retracement of the Nov-Jan move) en route to 1.2189 (Jan 22 high). On the other hand, immediate support is at 1.1952 (February 5 low), followed by 1.1887 (61.8% Fibonacci retracement of the November-January movement) and finally 1.1706 (200-day SMA).
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