The common currency may finish the trading week above the 1.1900 figure
Treasury yields continued to retreat from highs after Federal Reserve Chair Jerome Powell reiterated that inflation was not a worry. Against this backdrop, the dollar came under renewed pressure yesterday, lifting the euro. However, the USD index regained upside bias today as risk sentiment has deteriorated somehow amid worries about a potential tightening in monetary policy after China reported a stronger than expected rise in prices. In Europe, German and French industrial production both saw surprise drops in February.
During the early hours in Europe, the USD index is consolidating marginally above the 92.00 mark, erasing yesterday’s losses. EURUSD is correcting lower from the 1.1930 area, flirting with the 100-DMA. However, the pair could resume the ascent later today if the selling pressure surrounding the dollar reemerges. If so, the common currency will finish the trading week above the 1.1900 figure.
Furthermore, as the euro saw solid gains this week following three consecutive weeks of losses, the outlook for the European currency has improved somehow. Now, traders are gradually shifting focus to the 1.2000 barrier last seen in early-March when the EURUSD pair plunged under the 100-DMA.
In the immediate term, the euro needs to hold above the 1.1860 intermediate support in order to resume the ascent. A decisive break above the 1.1930 zone would add to the upside impetus surrounding the common currency in the short term. The rebound from this year’s lows near 1.1700 appears to have further legs to go in the very near-term despite the dollar turned positive on Friday.
However, the common currency could face hurdles on the way north in the medium term due to the ongoing pandemic in several European countries in combination with the outperformance of economic recovery in the United States that should give further lift to the greenback.