- EUR / USD recovers above 1.18 as the dollar falls.
- The USD is under pressure from lower yields.
- The ECB accounts stand out on the economic calendar of the region.
The common currency regains its smile and composure, which elevates the pair EUR / USD back above the key level of 1.18 during the European session on Thursday.
EUR / USD focuses attention on the ECB
The EUR / USD manages to leave behind three consecutive days with losses, including a drop to new lows near 1.1780 on Wednesday, and rallied back above the 1.18 level on Thursday.
Although the appetite for risk remains moderate, lower US yields appear to be hurting sentiment around the dollar and trigger a corrective pullback in the DXY US Dollar Index from multi-month highs.
Later, in the euro area, the ECB will publish its accounts of the last meeting, while President Lagarde will give a press conference on the results of the review of the ECB’s strategy.
In the United States, weekly jobless claims will be released today, followed by the EIA report on crude inventories.
What can we expect around the EUR?
The recent strong pullback in EUR / USD appears to have hit a decent soprote at around 1.1780 for the time being. Meanwhile, price action around the pair is expected to exclusively follow dollar dynamics, particularly after the last FOMC meeting supported prospects for higher inflation and the possible reduction in the bond buying program ahead of as planned. Additionally, support for the common currency comes in the form of auspicious results in the bloc’s foundations coupled with higher morale, a strong rebound in economic activity, and investor appetite for perceived riskier assets.
Key events in the eurozone this week: ECB accounts and ECB strategy review (Thursday) – ECB’s Lagarde discruso (Friday).
Eminent Background Issues: 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. Investors’ shift towards European equities.
EUR / USD levels
At the time of writing, the EUR / USD pair is gaining 0.27% on the day, trading at 1.1822. The next resistance is at 1.1895 (July 6 high), followed by 1.1975 (June 25 high) and finally 1.1999 (200-day SMA). On the other hand, a breakout of 1.1781 (July 7 low) would target 1.1762 (78.6% Fibonacci retracement of the November-January movement) and 1.1704 (March 31 low).
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