April 25, 2024

EUR/USD Reclaims Traction And Resumes Its Upward Trend Over 1.1400

The single currency’s confidence appears to have resurfaced, bringing EUR/USD up to the 1.1430 zone at the start of the week.

Following Friday’s slight drop to the 1.1400 area, EUR/USD regains upward momentum with a return of risk-on trade amongst market players and a lower Dollar. At the same time, primary Chinese calendar data also contributes to the optimistic mood.

The Dollar begins the week on a down note following dismal findings from the US docket on Friday, despite a slight increase in US rates.

Indeed, preliminary figures in China indicated that the economy grew at an annualized rate of 4.0% between October and December 2021, while factory output rose at a faster-than-expected 4.3% year over year in December.

On the downside, domestic demand remains sluggish following a weaker-than-expected 1.7% expansion in retail sales in the year to December.

These economic numbers in China may trigger some relaxation from the PBoC in the future, which should continue to support further recovery in the risk complex.

The pair’s upward tendency appears to be bolstered by the rise in 10-year German Bund yields to the -0.03% zone, which adds to Friday’s increase.

Italy’s final December inflation data will be released on the home front, whereas the Eurogroup is slated to convene later in the day.

Things To Watch For Around EUR

EUR/USD has been under pressure following fresh highs in the 1.1480 area. The pair’s outlook appears to have brightened in recent sessions, particularly when it broke through the 4m barrier on January 12 and is currently trading around 1.1380.

Meanwhile, the Fed-ECB policy difference and the performance of rates are projected to continue influencing the pair’s market movement for the foreseeable future.

ECB officials have been rather outspoken recently, admitting that high inflation may persist further in the Euro area, reviving talk about a rate hike by the monetary authority by the end of 2022.

On the other hand, the relentless spread of the coronavirus outbreak remains the sole element to consider when assessing the region’s economic development prospects and investor morale.

This week’s significant events in the eurozone include the following: Eurogroup Meeting (Monday) –, ZEW Survey Germany/EMU (Tuesday) –, Ecofin Meeting Germany Official December Consumer Price Index (Wednesday) – EMU Final December Consumer Price Index, ECB Accounts (Thursday) – ECB Lagarde, EC’s Flash Consumer Sentiment (Friday).

There are many significant issues with the rear boiler: There has been an asymmetric economic rebound following the epidemic in the Euro region.

The ECB’s stance toward or potential response to the region’s persistently rising inflation. The ECB’s tapering scenario and rate path are contentious. 

Italy elects its president in late January. And France will hold presidential elections in April.

EUR/USD Levels To Keep An Eye On

EUR/USD CHART Source: Tradingview.com

The spot is now up 0.10% around 1.1426 and confronts resistance around 1.1482 (2022 high Jan.14), 1.1501 (100-day SMA), and eventually 1.1511 (200-week SMA).

On the other hand, a breach beneath 1.1398 (bottom Jan.14) would seek 1.1351 (55-day simple moving average) on the way to 1.1272. (2022 low Jan.4).

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