- Euro (EUR) looks to break above US$1.2150
- German ZEW economic sentiment data to show deterioration.
- US Dollar (USD) falls on safe haven outflows
- FOMC meeting minutes released tomorrow
The Euro US Dollar (EUR/USD) exchange rate is edging cautiously higher on Tuesday. The pair settled slightly higher on Monday at US$1.2127 after easing back from session highs of US$1.2146. At 09:15 UTC, EUR/USD trades +0.14% at US$1.2144 as it looks to break through US$1.2150.
The Euro slipped off its highs on Monday after the President of the Eurogroup, Paschal Donohoe, said that supportive economic policies should remain in place in Europe as long as needed.
After a quiet start on the economic calendar this week, things start to pick up today with the release of the fourth quarter GDP for the region. Although this is the second reading so is unlikely to have as big an impact as the preliminary reading, unless of course is falls a significant distance from the initial print.
German ZEW economic sentiment data for February will be closely monitored as the Eurozone’s largest economy remains locked down. Expectations are for a further deterioration in morale owing to the extended covid restrictions and a slow vaccine rollout.
The recent upbeat market mood has dragged on demand for the safe haven US Dollar. Optimism of a solid vaccine led global economic recovery, in addition to hopes of huge economic stimulus in the US is sapping demand for the safe haven greenback. The US Dollar Index, trades at a three week low.
Confidence is growing that the rapid rollout of the covid vaccine will see economies quickly rebound to pre-pandemic levels.
Looking ahead the US economic calendar is light today. However, tomorrow sees the release of the minutes from the latest FOMC meeting. Investors will be scrutinizing the minutes closely for any clues as to when the Fed could remove some of the extreme liquidity which has supported the economy through the pandemic. US retail sales are also due to be released tomorrow and could provide some fresh direction for the greenback.