- EUR / USD regains bullish traction and rises above 1.2160.
- German economic sentiment improves to 71.2 in February.
- New York’s Empire State Manufacturing Index Release Highlights on the US Economic Calendar
The common currency is moving higher and drives EUR / USD to advance to weekly highs in the 1.2160 / 70 region on Tuesday.
EUR / USD remains firm and targets 1.2190
EUR / USD extends daily gains to 1.2160 / 70 zone after the publication of the positive results in the economic calendar of the euro.
In fact, economic sentiment in Germany improved to 71.2 points for the current month, up from 61.8. In the rest of the euro area, economic sentiment followed the German example and rose to 69.6 points, from 58.3 the previous month.
What’s more, a new review of the fourth quarter GDP figures in the euro zone overall shows the economy contracting 0.6% qoq, slightly better than the previous reading of a 0.7% decline forecast. On an annualized basis, the region is forecast to contract by 5.0%.
Looking at the bigger picture, reflation trading continues to dictate price action in global assets, helped at the same time by the accelerated rollout of vaccines in Asia and Europe. The latter gives additional support to the idea of ​​a strong rebound in economic activity in the second half of the year.
What can we expect around the EUR?
EUR / USD is still facing stiff resistance around the 1.2150 region. The rally from 2021 lows near 1.1950 (Feb 5) is supported by constructive long-term prospects for the pair and always supported by reflation trading expectations, hopes for a strong recovery in the region (and abroad), which in turn is underpinned by 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.
Key events in the eurozone this week: Minutes from the ECB on Thursday and preliminary PMIs for Germany and the eurozone on Friday.
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 0.24% on the day, trading at 1.2156. A break above 1.2173 (23.6% Fibonacci retracement of the November-January move), would target 1.2189 (January 22 high) en route to 1.2349 (January 6 high). On the downside, the next support is at 1.1985 (100-day SMA), followed by 1.1952 (Feb 5 low) and finally 1.1887 (61.8% Fibonacci retracement of the November-January move).
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