USD weakness to lift EUR/USD for 5th consecutive session.
An upbeat mood and uncertainty over an additional rescue package from Congress weigh on USD.
Euro is also underpinned by upbeat ECB comments last week
US Dollar weakness amid declining expectations of further fiscal stimulus saw the EUR/USD advance for a 5th straight session. Added to this rising sentiment as seen in the rallying stock markets resulted in safe haven outflows. Risk sentiment rose on Monday after AstraZeneca announced that it was restarting its covid vaccine trial. Risk on trading continued through the Asian session on Tuesday, picking up further following the release of encouraging Chinese data.
Meanwhile, the Euro continues to be buoyed by the ECB’s upbeat outlook for the economic recovery in the region. Furthermore, the ECB appeared unfazed by the Euro’s recent appreciation, boosting bullish sentiment surrounding the common currency. Despite the supportive factors EUR/USD trades at familiar levels given the caution ahead of Wednesday’s Federal Reserve monetary policy decision. This will be the first meeting since Fed Chair Jerome Powell revealed the adjustment in policy framework which is more tolerant of above target inflation. The focus will be on the updated economic projections and further hints that interest rates will be lower for a longer .
Prior to tomorrow Eurozone and German ZEW Survey watched for direction. In the US Empire State Manufacturing Index and Industrial Production data, could USD be producing some trading opportunities. Some repositioning could add volatility around the pair.