Euro Price Forecast: EUR/USD To Extend Rebound Ahead Of Q4 GDP

EURO, EUR/USD, Fiscal Stimulus, Coronavirus Vaccinations, Q4 Gdp – Talking Points:

  • Equity markets continued to climb during APAC trade on the back of falling COVID-19 cases.
  • The impending provision of additional fiscal stimulus may limit the US Dollar’s upside.
  • EUR/USD rates poised to extend recovery after breaching key resistance.

Asia-Pacific Recap

Equity markets continued pushing higher during Asia-Pacific trade, buoyed by progress in the global vaccine rollout and declining coronavirus cases. Australia’s ASX 200 climbed 0.91% and Japan’s Nikkei 225 surged above 30,000 for the first time since 1990, on better-than-expected GDP figures for the fourth quarter of 2020.

In FX markets, the cyclically-sensitive NOK, AUD, NZD and CAD largely outperformed, while the haven-associated USD, JPY and CHF slipped lower against their major counterparts. Gold price dipped marginally lower as yields on US 10-year Treasuries stormed 5-basis points higher. Looking ahead, trade balance and industrial production figures out of the Euro-area headline a rather light economic docket, with US markets shut for Presidents’ Day (FXA, FXC, FXF, FXY, UDN).

Euro Price Forecast: EUR/USD to Extend Rebound Ahead of Q4 GDP Print

DailyFX Economic Calendar

US Fiscal Stimulus Underpinning EUR/USD

As mentioned in previous reports, growing hopes that a substantial fiscal support package will be delivered by US lawmakers in the coming weeks has fuelled the Euro’s recovery against the US Dollar. The House Budget Committee is expected assemble the various pieces of President Joe Biden’s $1.9 trillion stimulus package this week, with the bill expected to go to the floor of the chamber on February 22.

A swift approval seems relatively likely given House and Senate Democrats have paved the way to pass the majority of the coronavirus-relief package with a simple majority – in a process called reconciliation. This will likely put further downward pressure on the Greenback in the near term.

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