EUR/USD Extends The Recovery To 1.1970 Ahead Of The ECB

The buying interest around the single currency remains well and sound and lift EUR/USD to weekly tops around 1.1970.

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EUR/USD now looks to the ECB

EUR/USD is up for the third session in a row on Thursday and reclaims the 1.1970 region, or multi-day highs, on the back of the moderate leg lower in the greenback.

In fact, diminishing US yields weigh on the buck and expose it to further downside after February’s inflation figures disappointed investors on Wednesday.

The pair gains extra pace as inflation fear to look somewhat mitigated and market participants re-shift their focus to the vaccine rollout (which keeps lagging in Europe) and hopes of a solid economic rebound in the second half of the year.

In the domestic calendar, all the attention will be on the ECB interest rate decision, although consensus sees the central bank keeping the monetary conditions unchanged. However, traders are expected to closely follow Lagarde’s press conference and any comment on the recent rebound in yields.

Across the pond, JOLTs Job Openings are due in the first turn seconded by usual weekly Claims.

What to look for around EUR

EUR/USD recorded new 2021 lows in the vicinity of 1.1830 region on Tuesday, although it managed to stage a moderate rebound afterward to 1.19 and well beyond. The solid rebound in the greenback as of late put the previous constructive stance in the euro under heavy pressure, as market participants continue to adjust to higher US yields and the outperformance of the US economy. A move below the critical 200-day SMA (around 1.1815) should shift the pair’s outlook to bearish in the near-term. In the meantime, price action around EUR/USD is expected to exclusively gyrate around the dollar’s dynamics, developments from yields on both sides of the ocean, extra fiscal stimulus in the US, and the global economic recovery.

Key events in Euroland this week: ECB interest rate decision/Press Conference/Economic Projections (Thursday) – EMU’s Industrial Production (Friday).

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