- EUR / USD further loses control and is approaching 1.2100.
- The dollar seems offered thanks to the higher yields of the United States.
- The German flash CPI exceeded estimates for April.
The EUR/USD still under pressure and now flirting with a possible visit to the 1.2100 zone.
EUR / USD offered after hitting monthly highs
EUR / USD interrupts two consecutive days with gains and is now under some downward pressure despite the initial rally to new monthly levels in the 1.2150 region.
The pair’s corrective downside is due to the pickup in buying interest around the dollar, in turn sustained by the strong rebound in US yields. In fact, 10-year US bond yields rise to new 2-week highs at around 1.70%, attenuating the post-FOMC pullback to around 1.60%.
At the beginning of the session and on the euro agenda, the change in unemployment in Germany increased by 9,000 in April, while the unemployment rate remained unchanged at 6.0%. Still in Germany, the flash CPI is forecast to rise 0.7% month-on-month and 2.0% year-on-year in April. In the euro zone as a whole, final consumer confidence stood at -8.1 (unchanged from preliminary data).
On the other hand, the US economy is expected to expand at an annualized 6.4% in the first quarter, based on GDP figures. The initial claims also increased by 553,000 compared to the previous week.
What to look for around EUR
EUR / USD bullish momentum reached the 1.2150 level before losing some steam on Thursday, always in the broader context of the persistent selling bias surrounding the dollar, which gained an additional pace following the subdued tone of the FOMC event. (Wednesday). Investors’ shift towards better growth prospects in the Old Continent now that the vaccine campaign appears to have gained a serious pace also seems to underpin the better mood in the European currency. Additionally, strong key fundamentals along with rising morale across the block also contribute to the pair’s monthly rally (from around 1.1700 to monthly highs around 1.2150 so far).
Technical levels
So far, the pair is shedding 0.15% at 1.2106 and a breakout of 1.1993 (April 22 low) would target 1.1933 (200-day SMA) en route to 1.1887 (61.8% Fibonacci from November-January rally). On the other hand, the next obstacle arises at 1.2150 (maximum of April 29) followed by 1.2243 (monthly maximum of February 25) and finally 1.2349 (maximum of January 6, 2021).
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