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EUR/USD moves to tops above 1.0920 on risk-on mood

  • EUR/USD gathers traction and reaches the 1.0920/5 band.
  • Generalized risk-on sentiment prevails in the global markets.
  • EMU’s Industrial Production, German 10-y Bund auction on tap.

The single currency is adding to Tuesday’s gains and is now lifting EUR/USD to fresh daily highs in the 1.0920/25 band.

EUR/USD stronger on risk trends, looks to data

The pair is up for the second session in a row on Wednesday, so far managing well to leave behind Tuesday’s 2020 lows in the 1.0890 zone.

Diminishing concerns around the COVID-19 continues to lend extra oxygen to the risk-associated universe and thus supporting further the recovery in the spot, all against the backdrop of renewed selling pressure hurting the greenback. Indeed, the US Dollar Index (DXY) remains on the defensive for another session after hitting new yearly highs on Tuesday.

Later in the euro docket, Industrial Production figures in the broader Euroland will be the sole release along with the German 10-year auction. Across the pond, Mortgage Approvals measured by MBA are due seconded by the Monthly Budget Statement and the EIA’s weekly report on US crude supplies.

In addition, Fed’s Powell will testify once again, this time before the Senate Banking Committee. Powell reiterated on Tuesday that the economy remains in “a good place”, while he stressed that it is still premature to evaluate the impact of the coronavirus on the economy.

What to look for around EUR

The pair has managed to bounce of YTD lows in the 1.0890 region (Tuesday) on the back of an apparent change of heart among investors towards the risk complex. In the meantime, USD-dynamics are expected to dictate the pair’s price action for the time being along with the broad risk trends, where the COVID-19 is still in the centre of the debate. On another front, the ECB is expected to finish its “strategic review” (announced at its January meeting) by year-end, leaving speculations of any change of the monetary policy before that time pretty flat. Furthermore, recent poor releases in Germany results in the euro region as of late seem to have lent support to the idea that the bloc could have left the worst behind, although that view looks premature, to say the least.

EUR/USD levels to watch

At the moment, the pair is gaining 0.03% at 1.0917 and faces the next resistance at 1.0989 (10-day SMA) seconded by 1.1063 (100-day SMA) and finally 1.1094 (weekly high Jan.31). On the other hand, a break below 1.0891 (weekly/2020 low Feb.11) would target 1.0879 (2019 low Oct.1) en route to 1.0569 (monthly low Apr.10 2017).

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