- Euro rally hits resistance at 1.0665 and retreats to 10640.
- The common currency remains bid against a softer USD.
- News that China is planning to scrap restrictions on inbound travelers has boosted risk appetite.
The Euro rally from 1.0615 area witnessed over the last sessions has been capped at 1.0665 right ahead of Tuesday’s European opening. The pair has pulled back to 1.0630 so far, yet with the short-term upside bias still intact.
Risk appetite hurts the US Dollar
The upbeat market sentiment at the week opening following a three-day weekend has been weighing on the safe-haven USD and boosting the common currency past 1.0630, to test the top of the last two weeks' trading range, around 1.0660.
The US dollar is trading lower on Tuesday, amid a moderate appetite for risk after the Chinese National Health Commission announced that they will scrap the quarantine for inbound travelers from January 8, even with COVID-19 infections rising sharply in the country.
Furthermore, data from last Friday showed that US inflation has eased further, suggesting that the peak of inflation might have been left behind, while consumer spending remained practically steady from the previous month. These figures offer some leeway for the Federal Reserve to ease its monetary tightening pace which has increased selling pressure on the USD.
World stock markets have reacted with advances to news from China, with most Asian indexes posting moderate gains. Likewise, the main European Indexes are posting gains at opening times. The French CAC advances 1%, with the German Dax Index 0.82% up and the British FTSE lagging behind with a 0.05% advance.
With the Eurozone macroeconomic docket practically empty on Tuesday, the focus will be on the release of November’s Preliminary Goods Trade balance, the Housing Prices Index, and the Dallas Fed Manufacturing Index due later today.
Technical levels to watch
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