- EUR/USD prints three-day uptrend near early January tops.
- Fedspeak, downbeat US data finally seem to fade reflation, tapering fears.
- US Treasury yields snap four-day downtrend but fail to recall greenback buyers.
- Covid, geopolitics add strength to the risk-on mood amid a light calendar.
EUR/USD stays well bid near the intraday high of 1.2260, up 0.07% on a day, heading into Wednesday’s European session. The currency major pair jumped to the fresh high since January 08 the previous day amid broad US dollar weakness while the risk-on mood can be traced for the quote’s latest run-up.
With the recent weakness in the US inflation expectations, Federal Reserve (Fed) officials seemed to have tamed the reflation fears and put a bid on the riskier assets. The same exerts an extra burden on the US dollar index (DXY), down 0.05% intraday near early January lows.
Also contributing to the upbeat sentiment, as well as to the EUR/USD upside, could be the US removal of China’s Xiaomi from the blacklist and a steady vaccination drive in the West. It’s worth mentioning that the US readiness to ease the Russian oil pipeline ban also favored the mood.
The same could be said for the recent economics wherein Germany IFO figures came in strong but the US statistics relating to the consumer sentiment, manufacturing activity and housing came in weaker.
Additionally, the European Central Bank (ECB) has a comparatively lesser push towards the monetary policy adjustments than Fed, which in turn directs risk-takers to the European currency (Euro).
Amid these plays, S&P 500 Futures part ways from Wall Street benchmarks while gaining 0.30% intraday whereas the US 10-year Treasury yield snaps four-day losing streak while picking up bids near 1.57%, up 1.2 basis points (bps).
Moving on, Wednesday’s economic calendar has fewer notable catalysts, other than the Fedspeak, which in turn keeps EUR/USD traders directed towards the other risk catalysts, mainly relating to the covid, trade and political issues, for fresh impetus.
Technical analysis
A clear upside break of February high and bullish MACD back EUR/USD buyers targeting the yearly top near 1.2350. Though, a convergence of a one-month-old rising trend line and highs marked during December 17-18, 2020, near 1.2275-80, as well as the 1.2300 threshold become strong hurdles to the north. Meanwhile, a pullback move needs to slip below February’s top near 1.2245 to retest the early month peaks close to 1.2180.