EUR/USD rallied above the daily cloud top to strike an 8-session high above parity, with longs having reason for optimism before key U.S. inflation data on Thursday.
A Wall Street Journal Click here saying that a gradual easing of COVID policies from China, which euro zone growth is highly dependent upon, has likely helped sentiment.
Tightening Italian-German spreads provide EUR/USD longs with added comfort.
Spreads have been trending tighter since the wides set in early October.
Despite a recent bout of widening the 10-year spread DE10IT10=RR looks set to begin another leg of tightening, which should add to EUR/USD buoyancy.
Technicals highlight upside risks.
Daily and monthly RSIs are rising, a monthly bull hammer candle is in place and EUR/USD is trading above the daily cloud as well as the rising 10- and 21-day moving averages.
October CPI USCPF=ECI on Thursday remains a key risk.
EUR/USD would gain if the data came out below forecast, with investors likely to price in a lower terminal Fed rate EDH3 and sell the dollar.
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