Thursday ended with the EUR/USD being high above of local resistance of 1.10. What's the target now?
Common currency jumps on Italy budget reports
On Wednesday, the common currency rebounded, offsetting up to five losing days because reports that Italy is on the verge of cutting its budget deficit after 2019 soothed worries over the prospect of a wider deficit, which had impacted financial markets.
The currency pair EUR/USD rallied by 0.23% being worth 1.1573, drifting away from Tuesday’s one-and-a-half month minimum of 1.1504.
Italian newspapers informed that the country’s populist authorities are going to diminish its budget deficit objectives for 2020 and also 2021 to respectively 2.2% and 2% and also stick with their initiative for 2.4% for next year.
The country’s authorities had initially told that they would intend to run a deficit of about 2.4% over the next three years that would have broken EU fiscal regulations, frightening financial markets and backing criticism from the European Commission.
Giuseppe Conte, Italian Prime Minister was expected to hold a cabinet gathering later in the day to talk about the situation. Moreover, Italy requires sending its draft budget plan to the European Commision by the middle of October.
The common currency leapt versus Japan’s currency. The currency pair EUR/JPY added 0.46% trading at 131.87 having slumped to a two-week minimum of 131.18 on Tuesday.
The evergreen buck tumbled versus a currency basket. Estimating the evergreen buck’s purchasing power versus a number of its main counterparts the USD index slipped by 0.16% trading at 94.99.
The evergreen buck jumped versus Japan’s currency because risk appetite revived. The currency pair USD/JPY added 0.19% coming up with a reading of 113.87.
As for the UK currency, it managed to ascend. The currency pair GBP/USD hit 1.2997 having dived to 1.2940 on Tuesday, which appears to be the weakest value since September 10 because market participants were still gloomy as for prospects for Brexit talks.
The EUR made a significant rise on the news of the stimulus expansion. Will it last long?
April seasonal patterns weren’t supposed to work, but somehow they did. Even a strong fundamental issue such as the global recession amid the coronavirus couldn’t overwhelm it. That’s why May seasonal patterns may work as well.
Poor US data, slow vaccine distribution, rising virus cases worsened the market sentiment and underpinned safe-haven currencies like the USD, and JPY.
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.