Daily Market Recap - EURUSD on the mends

The euro advanced against the dollar on Monday in a market awaiting US Central Bank (Fed) Chairman Jerome Powell's Tuesday and Wednesday hearings before US lawmakers. The EURUSD traded around 1.21535 late towards the daily close in Europe, extending a third consecutive day of gains.

“The Fed promised to keep a flexible policy and several of its members, including President Jerome Powell, explained that it was far too early to talk about tightening the screw,” UBS analysts said. They, therefore, believe that the dollar will continue its decline, after having already reached in January its lowest level in two and a half years against the European single currency.

Nevertheless, bond rates have begun to rise in the United States, and if inflation were to rise, the Fed could be forced to act. “The market will be watching Mr. Powell's Senate hearing even more closely than usual,” summed up Lee Hardman, an analyst at MUFG.

The market took note in the morning of the stronger than expected improvement in the business climate in Germany according to the Ifo Institute's survey, whose index rose to 92.4 in February after 90.3 in January. But the US figures are also encouraging: leading indicators confirm the good momentum of the US economy after the collapse of activity linked to the Covid epidemic.

From a technical perspective, the EURUSD seems to be regaining some upward momentum after closing confidently above its 20-day MA on Friday. The pair should continue to be lifted by the weakening greenback. Traders can expect added volatility in the coming sessions which may send the EURUSD for a test of the 1.22 psychologically significant level.

(Chart Source: Tradingview 22.02.2021)

The next hurdle rates fall in at 1.22226 and 1.23260 in an extension representing the imminent resistance areas. On the flip side, we should find support towards the 1.210 and 1.19601 levels below. Entry and exit levels can be inspired from the upper and lower bounds of the channel in blue.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.