EUR/USD: Market optimism is not positive as US stimulus becomes dollar booster

EUR/USD has been failing to recover as Europe's vaccination campaign lags. The euro is set to extend falls after the breakdown after breaking below the triple-bottom of 1.2050. In the US, Democrats may opt to pass the full stimulus bill, pushing yields and the dollar higher, FXStreet’s Analyst Yohay Elam reports.

Key quotes

“Taking full responsibility – European Commission President Ursula von der Leyen has reportedly acknowledged her mistakes in the bloc's vaccine debacle. That is unlikely to help the euro. The old continent's lag in immunizing its population has been raising fears of a double-dip recession and is weighing on the common currency.”

“President Joe Biden's relief package may turn into a greenback booster. Democrats have advanced the full package in the Senate using a partisan reconciliation process. Investors are upgrading their outlooks in response to prospects of additional spending, buying stocks and selling stocks – and the resulting increase in Treasury yields makes the dollar more attractive.”

“Momentum on the 4-hour chart remains to the downside and the pair remains on the back foot after convincingly falling below the triple-bottom of 1.2050. It is essential to note that the currency pair failed to climb back above this level, giving it extra importance.” 

“Support awaits at the new 2021 low of 1.2010, followed by 1.1960, 1.1930 and 1.1890, which were all in play in late 2020. Above 1.2050, the next resistance lines to watch are 1.2090, 1.2130 and 1.2190.”