- Eurozone economy recovery hopes
- U.S dollar Weakness
- Eurozone economic data
EUR/USD was up-bit in the Monday trading session at the back of one of the longest rally in more than a decade against the U.S Dollar. The single currency opened the week at the back of a ten-day rallying spree that has seen it rally to three-month highs against the greenback.
However, the pair has given up some gains after initially touching highs of $1.1375 in the Friday trading session. A drop to the $1.1290 appears to be a minor correction as the single currency continues to benefit from weakness in the dollar.
A rally to three-month highs against other major currencies has taken the single currency past key resistance levels. Thus, it does not come as a surprise that the single currency appears overbought with some strategist urging for caution going forward.
The bullish momentum on the Euro comes at the backdrop of the European Central Bank approving a €1.35 trillion stimulus package to revitalize embattled economies in the trading block. The stimulus plan will help support government bonds’ purchase as part of an effort to get more money into supply.
In addition, the EUR strength continues to benefit from an uptick of investor sentiments as prospects of a global economic recovery continue to edge higher. The easing of lockdown restrictions has helped fuel economic activity that had come to a halt amidst lockdown restrictions.
The EUR/USD pair has also continued to edge higher in response to weakness in the U.S Dollar. Greenback strength has edged lower in recent weeks as traders shifted attention to riskier assets from safe havens such as the dollar and Gold.
The European Central Bank President Christine Lagarde is poised to give a speech late Monday, expected to have some impact on Euro strength. On Tuesday, the focus will be on Germany and France Balance of trade reports. GDP Growth rate, quarter over quarter, and year over year is another crucial economic release that should influence the EUR/USD direction of trade.