- EUR / USD posted a nice intraday bounce from multi-day lows around 1.2100.
- A trend reversal in risk sentiment hit the dollar as a safe haven and acted as support.
Intraday selling of the USD accelerated during the early days of the American session and pushed the pair EUR/USD to new daily highs, around the 1.2160-65 region in the last hour.
The pair managed to find decent support before 1.2100 and made a nice bounce from the almost week lows touched earlier this Tuesday. A shift in global risk sentiment sparked some new selling around the safe-haven US dollar, which, in turn, was seen as a key driver driving the EUR / USD higher.
Despite doubts about the size and timing of the US stimulus package, hopes for a strong economic recovery continued to support the underlying bullish tone in financial markets. Risk sentiment received an additional boost after the International Monetary Fund revised its forecast for 2021 global economic growth to 5.5% from 5.2%.
The IMF, its latest World Economic Outlook report, cited stronger-than-expected momentum in the second half of 2020 behind the optimistic economic outlook, although it warned that the second wave of infections and new variants of COVID-19 represent a risk. The IMF further added that countries should continue to support economies until vaccine-driven normalization is underway.
Traders could follow the signals of the US stimulus headlines, which could affect market sentiment and influence the USD. However, the key focus will remain on Wednesday’s FOMC decision and Thursday’s release of advanced US Q4 GDP.
Technical levels
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