- EUR / USD rises to the 1.2050 region on Thursday.
- The ECB event will draw all the attention later in the session.
- Initial US jobless claims, the CB Leading Indicator Index, Housing Data and the Chicago Fed Index will be released during the American session.
Following Wednesday’s unfinished price action, EUR / USD now attempts to resume the rally and revisits the 1.2050 region, in daily highs.
EUR / USD focuses attention on the ECB
EUR / USD extends the small advance recorded the previous day due to continued selling bias around the US dollar and the downward movement in US yields to fresh multi-week lows.
In fact, US 10-year benchmark yields are hovering around the 1.53% zone, levels last seen in early March, maintaining firm its monthly decline from highs above 1.77% (March 30).
Meanwhile, investors continue celebrating growth prospects in Europe, which in turn are supported by a firmer pace of vaccination and at the same time, they give an additional boost to optimistic sentiment in risk appetite, weighing on the safe-haven USD.
Later in the session, the ECB is expected to keep its monetary conditions unchanged, although it positively evaluates the performance of the economic recovery and stay upbeat when it comes to growth prospects in the coming months. At President Lagarde’s press conference, a debate is seen revolving around the Pandemic Emergency Purchasing Program.
In the euro economic calendar, the European Commission will publish its preliminary indicator of consumer confidence for the current month.
Regarding US data, initial claims and weekly unemployment, the Chicago Fed National Activity Index, Existing Home Sales and the CB Leading Indicator Index will be released today.
What can we expect around the EUR?
EUR / USD moved to new highs around the 1.2080 level before losing some traction amid resurgence in demand for the US dollar and volatility from new coronavirus issues. The continuation of the rally has been supported so far by the renewed selling bias around the dollar coupled with investors’ shift towards the growth outlook in Europe now that the vaccination campaign appears to have gained serious momentum. In addition, strong key fundamentals and improving eurozone sentiment in recent times also appear to bolster momentum around the common currency.
Key events in the eurozone this week: ECB Decision on Interest Rates, President Lagarde Press Conference, European Commission Preliminary Consumer Confidence (Thursday) – April Preliminary PMI, Lagarde Speech (Friday).
Eminent Background Issues: Asymmetric economic recovery in the region. Sustainability of the rebound in inflation figures. Progress of the vaccine launch. Likely political turmoil around the EU Recovery Fund.
EUR / USD levels to watch out for
At the time of writing, the EUR / USD pair is gaining 0.10% on the day, trading at 1.2046. The next resistance is at 1.2079 (April 20 high), followed by 1.2243 (February 25 high) and 1.2349 (January 6 high). On the other hand, a breakout of 1.1955 (50-day SMA), would target 1.1916 (200-day SMA) on the way to 1.1762 (78.6% Fibonacci retracement of the November-January move).
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