- EUR / USD finally breaks the key barrier at 1.2200 on Tuesday.
- The decline in the dollar leads the DXY index to break below the 90.00 level.
- The GDP figures for the first quarter of the eurozone stand out on today’s economic calendar.
Buying pressure around the common currency remains firm during the European session on Tuesday and raises the EUR / USD pair to new highs of 3 above the 1.2200 level. At the time of writing, the pair remains in the region of daily highs near the 1.2220 level.
EUR / USD moves higher on USD weakness
The EUR / USD advances for the fourth day in a row on Tuesday, extending recovery above the key 1.2200 barrier for the first time since late February.
Selling pressure around the US dollar continues to gain strength despite stable performance of US bond yields In the eurozone, German 10-year Bund yields are navigating the upper end of the range around -0.10% and further strengthen the rally in pair.
It also supports the rebound of the EUR / USD pair the better overall sentiment around risk appetite.
Regarding the euro data, the review of First quarter GDP figures have shown that the economy contracted 0.6% quarter-on-quarter in the three months to March 2021, matching the -0.6% expected. On an annualized basis, the bloc’s GDP fell by -1.8% in the first quarter, meeting expectations.
Across the Atlantic, the focus will be on the housing sector data, with the data released and housing starts and building permits.
What can we expect around the EUR?
EUR / USD finally breaks above the key hurdle of 1.2200, amid the continued recovery from last week’s lows in the 1.2050 region, always supported by the strong rebound in 10-year German Bund yields. and the general optimistic tone in the appetite for risk. The pair’s sustained rally also comes in response to investors’ shift towards better growth prospects in the Old Continent now that the vaccination campaign appears to have gained serious pace, along with strong fundamental data from the region.
Key events in the eurozone this week: Eurozone Q1 Advanced GDP (Tuesday) – Eurozone Final CPI for April (Wednesday) – May Eurozone and Germany PMI and Preliminary Consumer Confidence (Friday).
Eminent Background Issues: Asymmetric economic recovery in the region. Sustainability of the rebound in inflation figures. Progress in the vaccination campaign. Likely political turmoil around the EU Recovery Fund. German elections.
EUR / USD levels
At the time of writing, the EUR / USD pair is gaining 0.58% on the day, trading at 1.2218. The next resistance is at 1.2243 (Feb 25 high), followed by 1.2300 (round level) and 1.2349 (Jan 6 high). On the downside, a break below 1.1985 (May 5 low), would target 1.1955 (200-day SMA) en route to 1.1887 (61.8% Fibonacci retracement of the November-January move).
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