EUR/USD has topped 1.21 amid the upbeat mood and falling coronavirus cases in Europe. Fundamentals point to extended gains for the pair yet only overbought conditions can halt the euro, Yohay Elam, an Analyst at FXStreet, reports.
US Durable Goods Orders and virus news are set to dominate trading
“US dollars are coming to Europe – the EU is set to welcome vaccinated American tourists in the summer, which is just around the corner. Apart from having a positive direct effect on EUR/USD, the potential revival of the old continent's tourism sector is one of the reasons the euro is on the rising.”
“Monday's loosening of restrictions in Italy and France is a positive development. More importantly, the pace of inoculations has substantially picked up in Europe with another acceleration on the cards during the remainder of April and throughout May. Roughly 42% of Americans have received at least one jab, and the rate is only half across the pond – but picking up much-needed steam.”
“Broader markets are also favoring additional EUR/USD gains. The safe-haven dollar is on the back foot as investors refocus on recovery rather than on India's horrific COVID-19 crisis, which has implications well beyond South Asia.”
“The focus is later set to shift to US Durable Goods Orders. Investment has probably picked up in March after a drop in February. The 2.5% expected pickup in the headline figure and the projected 1.5% rise in Nondefense ex Aircraft – aka ‘core of the core’ – feed into Thursday's all-important growth figures.”
“Momentum is to the upside and the Relative Strength Index (RSI) is just under 70. If this indicator tops that level, it would enter overbought conditions and signal a correction. However, bulls currently remain in control.”
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