EUR/USD bounces off lows, stays near 1.2100 ahead of Lagarde

22 February, 2021

EUR/USD meets selling pressure and drops below 1.2100. German IFO Business Climate improved further in February. ECB’s Christine Lagarde will speak later in the session. The single currency faces some mild selling pressure and drags EUR/USD to the 1.2090 region at the beginning of the week, just to rebound afterwards.

EUR/USD hovers around 1.2100 ahead of Lagarde

EUR/USD looks to rebound from the earlier drop to daily lows in the 1.2090 region on the back of the resumption of some buying interest in the greenback. The move, however, appears short-lived as market participants gauge the positive results from the euro docket coupled with the usual reflation trade the firmer vaccine rollout and prospects of extra US fiscal stimulus.

In fact, the German Business Climate tracked by the IFO survey improved to 92.4 for the current month, climbing at the same time to 4-month highs. Later in the session, the ECB’s C.Lagarde will speak on ‘Stability, Economic Coordination and Governance in the EU’.

Across the pond, the Chicago Fed National Activity Index and the Dallas Fed Manufacturing Index are all due later in the NA session along with the speech by FOMC’s M.Bowman (permanent voter, centrist).

What to look for around EUR

EUR/USD regained the 1.2100 mark and above after meeting decent support in the 1.2020 region during last week. The constructive outlook for the pair, however, is expected to remain unchanged in the longer run, always supported by the reflation/vaccine trade and hopes of a strong recovery in the region. In addition, real interest rates continue to favour the euro area vs. the US, which is also another factor supporting the EUR along with the huge, long positioning in the speculative community.

Key events in Euroland this week: ECB’s Lagarde will speak later on Monday and will participate in the G20 meeting of central bank governors and finance ministers on Friday. January’s final inflation figures (Tuesday). German final Q4 GDP results (Wednesday). European Council meeting (Thursday and Friday).

Eminent issues on the back boiler: EUR appreciation could trigger ECB verbal intervention, always on inflation issues. EU Recovery Fund. Huge long positions in the speculative community.

EUR/USD levels to watch

At the moment, the index is losing 0.03% at 1.2110 and faces the next support at 1.2023 (weekly low Feb.17) followed by 1.1999 (100-day SMA) and finally 1.1952 (2021 low Feb.5). On the other hand, a breakout of 1.2169 (weekly high Feb.16) would target 1.2173 (23.6% Fibo of the November-January rally) en route to 1.2189 (weekly high Jan.22).

Source   Presented by OctaFX
Dollar surges, stocks sink after Powell lets yields run loose5 Mar, 2021  

Investors hoping for fresh clues from the Fed about how it plans to ride through the storm in bond markets were left disappointed on Thursday after Chair Jerome...

Dollar snaps gains as Fed doubles down on easy policy3 Mar, 2021  

The panic that roiled bond markets last week continued to recede on Wednesday as central bankers from Europe, Australia and elsewhere warned against sudden...

Technical Outlook: EURUSD poised to breach 1.202 Mar, 2021  

The euro is not looking too pretty this morning. It has weakened against the dollar and Japanese yen but gained some ground against the New Zewland dollar...

Dollar retreats as Fed restores calm25 Feb, 2021  

All that was needed to restore order in financial markets were some soothing words from the Fed's top brass and some encouraging vaccine news. Wall Street came...

Dollar and tech shares suffer ahead of Powell's testimony23 Feb, 2021  

It was a particularly strange session on Monday, with many of the familiar relationships between asset classes breaking down thanks to the pandemonium...

Euro fell after good report on US economy's growth rate18 Feb, 2021  

Considering that the eurozone GDP report was slightly better than economists' forecasts, and the index of sentiment in the business environment in Germany...

Rising US yields resuscitate dollar, scare equities17 Feb, 2021  

The yields on other government bonds have also been rallying in recent days. But looking at real yields, which matter more for investors as they factor in inflation...

EURUSD Daily: Bulls momentum on the increase15 Feb, 2021  

The bears had a firm grip on the EURUSD currency pair on the D1 time-frame and that brought on a month- long downtrend that lasted until 5 February...

Eurozone GDP contracted by 5.1% in 20203 Feb, 2021  

The Eurozone GDP growth rate change report for the fourth quarter of 2020 was released on Tuesday. As a consequence, we already know the final result for the whole...