EUR/USD looks firm and is now targeting the 1.0880 zone

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  • EUR/USD rebounds and flirts with 1.0870.
  • Risk appetite continues to support bullish sentiment.
  • Economic Sentiment in Germany surprised to the upside in January.

The bulls press harder and lift the EUR/USD to fresh daily highs near 1.0870 on Tuesday, just a few pips from Monday’s yearly high.

EUR/USD: More Gains Needed to Break Out of 1.0874

The dollar continues to lose strength allowing EUR/USD to gain additional momentum and approach Monday’s yearly highs near 1.0880.

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In fact, investors continue to favor the risk complex on Tuesday, supported by the positive results of the Chinese agenda during the early stages of trade, as well as by the firm impressions of Economic Sentiment in both Germany (16.9) and the zone. euro in general (16.7) for the month of January.

However, it contrasts with the weak tone of yields on both sides of the Atlantic.

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In US data, New York’s Empire State Manufacturing Index worsened to -32.9 for the current month (from -11.2).

What to expect from the EUR

For now, EUR/USD looks well propped up around the 1.0800 area and looks set to retest the 1.0880 area on Tuesday amid favorable risk appetite trends.

The evolution of the prices of the European currency should closely follow the dynamics of the dollar, as well as the impact of the energy crisis on the euro block and the divergence between the Fed and the ECB.

Returning to the euro zone, the growing speculation about a possible recession in the bloc emerges as a major domestic headwind facing the euro in the near term.

technical levels

For now, the pair gained 0.40% at 1.0864 and faces the next bullish barrier at 1.0874 (16 Jan monthly high), followed by 1.0900 (round level) and finally 1.0936 (April 21 weekly high). of 2022). On the flip side, the break of 1.0481 (monthly low Jan 6) would target 1.0476 (55-day SMA) en route to 1.0443 (weekly low Dec 7).

Source: Fx Street

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