- EUR / USD is under selling pressure and falls below 1.2100.
- Germany’s IFO business sentiment improves further in February.
- Christine Lagarde, President of the ECB, will speak later in the day.
The common currency has faced slight selling pressure and has dragged the EUR / USD to the 1.2090 region at the start of the European session on Monday. At time of writing, the pair is recovering from lows and is back in the 1.2120 region.
EUR / USD around 1.2100 before Lagarde
EUR / USD appears to rebound from falling to daily lows in the 1.2090 region triggered by the resumption of some buying interest around the US dollar.
However, the movement seems short-lived, As market participants assess positive results from European economic data alongside reflation trade, firmer vaccine launch and prospects for fiscal stimulus adicional en EE.UU.
In fact, the German business sentiment as measured by IFO survey improved to 92.4 points for the current month, at the same time rising to 4-month highs. Later in the day, ECB President Christine Lagarde will speak on “stability, economic coordination and governance in the EU.”
On the other side of the Atlantic, the Chicago Fed National Activity Index and the Dallas Fed Manufacturing Index will be released today. Additionally, FOMC permanent voter M. Bowman has a speech scheduled.
What can we expect around the EUR?
EUR / USD rallied above the 1.2100 level after finding decent support in the 1.2020 region for the past week. However, the constructive outlook for the pair is expected to remain unchanged in the long term, always supported by the expectations of the reflation trade, the hopes of a strong recovery in the region (and abroad), which in turn is sustained on additional fiscal stimulus from the Fed and the ECB along with hopes of 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: Lagarde will speak later on Monday and participate in the G-20 meeting of central bank governors and finance ministers on Friday. Final inflation figures for January (Tuesday). Final results of the GDP of the fourth quarter of Germany (Wednesday). Meeting of the European Council (Thursday and 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 shedding 0.03% on the day, trading at 1.2110. Next support is at 1.2023 (Feb 17 low), followed by 1.1999 (100-day SMA) and 1.1952 (Feb 5 low). On the other hand, a breakout of 1.2169 (February 16 high) would target 1.2173 (23.6% Fibonacci retracement of the November-January move) on its way to 1.2189 (January 22 high).
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