EUR/USD advances for the third session in a row and gradually approaches the key 1.1300 neighbourhood bolstered by the re-emergence of quite firm appetite for riskier assets and the continuation of the downside in the greenback.
Collaborating with the offered stance in the dollar, US yields remain on the defensive, while yields of the German 10y Bund now recede some ground after Monday’s tops past 0.03%.
Further weakness in the buck came after FOMC’s R.Bostic suggested on Monday that a Fed’s 50 bps interest rate hike should be out of the table in March.
In the domestic docket, the German and EMU final Manufacturing PMIs came in a tad softer than the preliminary readings at 59.8 and 58.7, respectively, for the month of January. Still in Germany, encouraging figures from the labour market saw the jobless rate retreating to 5.1% in January, with 2.345M persons unemployed, and the Unemployment Change shrinking by 48K people. Earlier in the session, Retail Sales contracted 5.5% MoM in December and came in flat vs. December 2020.
EUR/USD extended the bounce off 1.1120 (January 28) and now re-targets the 1.1300 barrier amidst improved risk appetite trends and the renewed selling mood in the dollar. Moving forward, the outlook for the pair remains far from rosy despite the rebound, particularly in light of the Fed’s imminent start of the tightening cycle vs. the accommodative-for-longer stance in the ECB, despite the high inflation in the euro area is not giving any things of cooling down for the time being. On another front, the unabated advance of the coronavirus pandemic remains as the exclusive factor to look at when it comes to economic growth prospects and investors’ morale in the region.