EURUSD has got a lift from upbeat economic data out of Germany
Following gains in Asia, dollar recovery is losing steam during the European hours as risk sentiment looks mixed at the start of the trading week. Against this backdrop, the euro managed to erase early losses while holding marginally above the 1.2100 figure. EURUSD was last seen flat on the day, struggling for direction in the near term.
The pair has got a lift from upbeat economic data out of Germany. The headline German IFO business climate index arrived at 92.4 in February versus 90.5 expected, the current economic assessment came in at 90.6 versus 88.9 expected, while the expectations index climbed to 94.2 from 91.5, exceeding market expectations of 91.8.
Also on the positive side, Germany’s Chancellor Angela Merkel said that she is seeking a four-stage plan to loosen the lockdown. Despite Merkel refrained from disclosing the details, the statement was enough to help the euro erase early losses further.
Earlier in the day, the European currency derived support from the 20-DMA, today at 1.2090. As long as the prices stay above this moving average, downside risks are limited in the short term. In a wider picture, the euro remains within a broader bullish trend despite a negative bias that prevails this year.
In the short term, however, the euro’s upside potential remains limited due to the rising dollar amid a risk-off market mood. Later today, ECB’s Lagarde will speak. Her comments could affect the pair’s dynamics, with the immediate support being represented by the mentioned moving average while the nearest resistance arrives in the 1.2150 area that could once again trigger a pullback.
Of note, the Chairman of the Federal Reserve is scheduled to testify before Congress on Tuesday and Wednesday. Powell is widely expected to reiterate the bank’s commitment to supporting the recovery. If so, the greenback could come under renewed selling pressure and thus push the common currency higher this week.