EUR/USD bulls seeking territory in the 1.18 level
- EUR/USD finishing up the US day on a strong note.
- US dollar is struggling in a risk-on environment and long term headwinds are weighing on the outlook.
EUR/USD is trading at 1.1799 between a range of 1.1721 and 1.1806 on the day as the dollar struggles to sustain a convincing correction.
The euro is finding fresh legs in bullish territory once again, taking the greenback lower by over 0.3% in the day so far with prospects of a close today in the 1.18 area.
markets have been enthused in a re-assessment of European growth prospects in light of progress on the EU recovery fund which gave life to the euro vs the greenback last month.
The US dollar has fallen out of favour of market participants for a number of fundamentals which are lingering bearish inputs that are not about to disappear over the horizon anytime soon.
As analysts at Westpac note, going forward, ''a Fed that shifts to average inflation targeting is likely to leave rates on hold for an even longer period than is currently envisaged, undercutting upside potential for the USD that might otherwise occur.
The Fed’s dovish resolve is not in doubt. A shift to average inflation targeting is likely to cement their commitment even further.
That, combined with virus-thwarted rebound prospects and the ongoing positive reappraisal of EUR’s long-term prospects following Europe’s fiscal burden sharing accord, leave the USD in very poor shape over the medium term.''
Analysts at Commerzbank explained that they will continue to allow for a deeper correction. Initial support lies 1.1625/38 (a double bio) ahead of the March high at 1.1495. Ideally dips lower will be contained by the2 month uptrend at 1.1453.
Above 1.1915 will just go with it and look for further gains to 1.2635/66, the 200month where are we wrong? Below the two-month support line at 1.1453, would allow for some slippage back towards 1.1343200-week ma, Short term trend (1-3 weeks): Target1.1815/25 met, allow for consolidation. Long term trend (1-3 months): A close above 1.1815/25 will target 1.2635 the 200 month ma.