EUR/USD set to fall as dollar breather looks temporary

EUR/USD has recovered as US yields dropped off the highs but America's vaccination advantage, upcoming stimulus and bond auctions all point to fresh EUR/USD falls, FXStreet’s Analyst Yohay Elam reports.

Key quotes

“Congress is on the verge of approving President Joe Biden's massive $1.9 trillion coronavirus relief package, and the mere need to issue more debt is set to raise yields and the dollar. A bond auction due on Wednesday is highly anticipated.” 

“In the old continent, updated growth figures for the fourth quarter will likely confirm the contraction of 0.6% previously reported. Prospect is not much better. European countries have vaccinated roughly 8% of their populations while the US is at 18% and accelerating. Italy's fresh COVID-19 wave is of specific worry.”

“The European Central Bank is capable of boosting the eurozone economies but seems unwilling or unable to ramp up support. The latest weekly bond-buying figures have shown a slowdown rather than a pick-up in support.”

“Support awaits at the new 2021 trough of 1.1836, followed by 1.1775 and 1.1730.” 

“Resistance awaits at 1.1888, the daily high and roughly last week's low – a separator of ranges. It is followed by 1.1930 and 1.1950.”