- EUR / USD reverses some of the recent pullback and is targeting 1.19.
- German 10-year yields point higher above -0.20%.
- Christine Lagarde will speak later in the day.
The single currency leaves behind some of the recent weakness and pushes the EUR/USD back to the proximity of the 1.1900 zone today Monday.
EUR / USD firmer and more focused on Lagarde
Finally, the EUR / USD shows some signs of life after bottoming below 1.1850 during the Asian session.
The deep FOMC-led pullback from levels around 1.2130 on Wednesday appears to have found some decent support in the 1.1845 / 50 zone for the time being, as investors appear to be cashing in on some of the recent strong gains in the dollar.
The pair’s rally comes in tandem with a positive tone in German 10-year benchmark returns, which manages to return to -0.20% after briefly flirting with multi-week lows near -0.30 earlier in the month. However, a more obvious factor in the recent decline in the EUR / USD comes from the yield differential at the shorter end of the curve between US and German banknotes.
There are no data releases scheduled in the euro zone on Monday, although investors are expected to closely follow the speech of the President of the ECB, Christine Lagarde, before the European Parliament later in the session.
Key events in the euro zone this week: Lagarde Speech (Monday) – Eurozone Consumer Confidence (Tuesday) – Preliminary PMI Data for Germany and the Eurozone – (Wednesday) – German IFO Survey (Thursday) – German GfK Consumer Confidence, European Council Meeting (Friday ).
Issues affecting the euro: Asymmetric economic recovery in the region. Sustainability of the rebound in inflation figures. Progress of the vaccine implantation. Likely political turmoil around the EU Recovery Fund. German elections. Investor shift to European equities.
EUR / USD levels
At time of writing, the pair is gaining 0.24% at 1.1892 and facing the next resistance at 1.1992 (200-day SMA) followed by 1.2032 (100-day SMA) and finally 1.2064 (38.2% Fibo retracement of the rally. November January).
On the downside, a break below 1.1847 (June 18 monthly low) would head to 1.1835 (March 9 low) en route to 1.1704 (2021 low on March 31).
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