Published on 19.10.2021 09:23

The Euro has hit a 3-week high against the US dollar as we gear up to enter the European trading session on the back of improved risk sediment and weaker than expected data released from the US yesterday.

Industrial Production numbers out of America hit the market at -1.3%, versus analysts’ expectations for a number of 0.2 while Capacity Utilization came in at 75.2% which was slightly lower than consensus for a figure of 76.5%.

The Euro was probably overdue for a rally against the greenback as it had been lagging behind its peers such as the British pound and Australian dollar which have been able to rack up substantial gains against the US dollar over the past week.

However, the different views monetary policy outlooks on between the US federal Reserve and the European Central Bank (ECB) will likely cap any further gains for the Euro. The economic recovery is well underway in the US after the devastating effects of Covid 19 and the Fed is well on track to withdraw the pandemic stimulus as early as November. 

The ECB on the other hand is more than willing to keep their pandemic stimulus program in place for the time being as the number of coronavirus cases rise which his exasperated by rising energy prices such as gas and petrol which are at there highest level in many years.

The economic calendar from both the Eurozone and the US is once again relatively light today and the only news likely to cause any movement in the Eur/USD currency pair is a speech from the ECB’s Frank Edelson and Philip Richard Lane during the European session and in the American session a speech by US Federal reserve board member Christopher J. Waller .

After finding strong support at the $1.1528 mark the Euro has managed to put together 5 straight days of gains which has also seen a clean break of the downtrend that begun on September the 3rd.

The next hurdle for the Eur/USD currency pair to overcome is the $1.1685 resistance level which is just below the 50 day moving average and unless we see much better than expected consumer price index figures from the Eurozone tomorrow, the chances of the Euro moving past these critical levels is very slim.


FAQ