The euro appreciated against the US dollar for the fourth consecutive session on Tuesday, reaching its highest level since February 25 as fears of an earlier-than-expected rate hike on the part of the Federal Reserve subsided. are appeased despite the rage of US inflation. Meanwhile, investors are now betting on a stronger recovery in Europe as economies reopen and vaccination rates increase.
At 8:38 p.m. GMT, EUR / USD is trading at 1.2224, up 0.0072 or + 0.59%.
Gains were limited early in the session after yields on 10-year US Treasuries edged up to 1.65%, but prices rose late as yields edged down.
The focus is now on the Fed minutes which are expected to be released at 6:00 p.m. GMT on Wednesday. Investors will look to the minutes for any indication of the Fed’s view on rising inflation.
Technical analysis of the daily swing chart
The main trend is up according to the daily swing chart. A trade passing through 1.2224 will signal a resumption of the uptrend. A move to 1.2243 will reaffirm the uptrend. The main trend will go down on a move through the last swing low at 1.2052.
The primary range is from 1.2243 to 1.1704. EUR / USD is trading well above its retracement area at 1.2037-1.1973, which is key support. It also controls the short-term direction of the single currency.
Short term outlook
Traders’ reaction to the February 25 main high at 1.2243 will set the tone on Wednesday morning as traders prepare for the Fed minutes release.
Volume may rise early in the session, so a break above 1.2243 may be delayed until volume increases after the Fed minutes release at 6:00 p.m. GMT.
Traders will likely bet on a bullish breakout as the minutes should reiterate the Fed’s view that inflation was transient.
The daily chart indicates that there is a lot of room to the upside on a breakout above 1.2243 with 1.2349 the next likely target.
For an overview of all of today’s economic events, check out our economic calendar.