EUR/USD Rises on Recovery Fund Hopes

EUR/USD stars as currency markets remain rangebound

The euro had its day in the sun overnight, EUR/USD rising by 0.50% to 1.1400 as hopes rise that the long-awaited EUR750 billion package will be agreed on Friday. EUR/USD now seems set to retest its March highs around 1.1500 this week. Gains past that level though, are unlikely until the pen is put to paper on the recovery package.

GBP/USD sank as low as 1.2480 overnight as Britain announced a ban on Huawei’s telecom equipment from its 5G network and gave UK Telco’s until 2027 to remove other equipment. With China retaliation, a certainty, GBP/USD wilted, before recording on vaccine sentiment later in the day. GBP/USD is unchanged at 1.2570 today but has now failed for three consecutive days ahead of its 200-day moving average at 1.2693. With China looming from its dark tower, falling Gilt yields and a procession of weak economic data, Sterling’s next move is more likely to be a test of support at its 100-day moving average at 1.2425.

Moderna announced positive results from its experimental Covid-19 from another small-scale human trial. More significantly this time, the results have been published in a peer-reviewed journal, meaning independent eyes have been cast over the results, and like what they see.

Elsewhere though, currency markets were quiet, with the dollar index edging 0.20% lower to 96.27. The Moderna news has boosted sentiment in Asia, however. The US dollar has moved lower against the trade-centric Australian and New Zealand dollars, as well as the yuan and regional Asian currencies. Notably, the AUD/USD is just below 0.7000 today. A break will likely spur more technical buying.

With the pendulum swinging to the positive side of the scale in Asia, the US dollar is likely to give ground slowly for the rest of the session. That mood should persist until the US data this evening.

Reprinted from Marketpulse.com, the copyright all reserved by the original author.

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