The euro has broken above a key technical resistance early Monday and appears well positioned to build on recent gains, with a test of its March 3 high likely in the coming week,as traders look for excuses to buy the single currency.
The EUR/USD has recently risen on positive data out of the euro zone and also gained when the U.S. posted strong economic numbers nL8N2MG279nL1N2MG1AR.
Strong U.S. data supports the global reflation trade and encourages investors to sell the safe-haven dollar.
The closely watched German Ifo, due this week, is expected to show marked improvement.
Traders will likely look past EZ flash first-quarter GDP, which is expected to show a second straight quarter of contraction, as it is historic and instead focus on the positive outlook expressed by the European Central Bank at last week's meeting nL1N2MF0DA.
On Wednesday, the Federal Reserve is expected to reassure markets it will ignore temporary spikes in inflation and maintain ultra loose policy settings for the foreseeable future nL4N2MJ00V.
The EUR/USD edged above the 61.8 Fibonacci retracement of the 2021 drop from 1.2349 to 1.0704 at 1.2103 early Monday, hitting a high of 1.2109. There is minor resistance at the March 3 high at 1.2113 and a clear break above 1.2115 targets 76.4% of the 2021 move at 1.2196.
The likely objective of the current uptrend is the Feb 25 high at 1.2243.
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