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Apr 08 - 11:55 AM

EUR/USD - COMMENT-EUR/USD Getting Back On Track For A Run Toward 1.2000

By Christopher Romano  —  Apr 08 - 10:17 AM

EUR/USD bulls regained their footing on Thursday and could resume the trek toward 1.2000/50 with support from the ECB, U.S. data, interest rates, options and techs.

Minutes of the March 10-11 ECB meeting indicated the possibility of reducing bond purchases despite the need for maintaining ample monetary stimulus.
The minutes also said it was argued that higher real rates were not necessarily a cause of concern and noted the upgrade in the outlook for the external environment nF9N2KZ005.

Above estimate U.S. weekly and continuing claims nL1N2M02GB data helped boost EUR/USD as the 10-year yield US10YT=RR slumped and eurodollar prices EDZ2 rallied, which put downward pressure on the dollar.

Options show investors are slightly wary of EUR/USD upside.
Risk reversals EUR1MRR=FN indicate vol premiums for calls continue to exceed those for puts.
The premium is not large, which indicates options investors are wary of a slow grind higher in EUR/USD.

Technicals highlight upside risks.
The 21-day moving average is helping to limit EUR/USD pull backs, daily and monthly RSIs imply upside momentum remains and the 200-DMA has been pierced again.

A run at 1.2000/50 resistance still seems likely.

For more click on FXBUZ

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Refinitiv IFR Research/Market Commentary


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