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EURUSD: sterling and kiwi drive up the whole FX market

The EURUSD pair closed slightly lower on Tuesday, February 23, down 0.03% to 1.2150. The single currency fell to 1.2135 during the European session. All attempts by the bulls to regain the momentum fell through due to a decline in the EURGBP cross pair.

The GPBUSD pair climbed to 1.4114. Buyers are betting on the recovery of the UK economy due to a successful vaccine rollout. PM Boris Johnson on Monday laid out a road map to phase out the current lockdown in the UK. Cable has been drawing additional support from the BoE’s commitment not to introduce negative interest rates at this juncture.

Today’s macro agenda (GMT 3)

  • 18:00 US: new home sales (January), Fed Chairman Powell speech
  • 18:30 US: EIA weekly petroleum status report
EURUSD: sterling and kiwi drive up the whole FX market

Current outlook

Major currencies have been trending higher in Asian trading on Wednesday, February 24, with sterling ( 0.54%) and the kiwi ( 0.50%) seeing green on the screen.

The Briton advanced 1% against the dollar to 1.4241. The morning rally triggered stop loss buying in EURGBP long positions below 0.8600 as the price dropped to 0.8539 (-63 pips).

The New Zealand dollar strengthened to 0.7384. The gains came on the back of a decision by the Reserve Bank of New Zealand to leave monetary policy unchanged. The Committee agreed that monetary policy should remain supportive until inflation holds steady at 2%. The economic outlook remains uncertain.

At the time of writing, the euro was trading at 1.2156. Given the morning rally in GBP and NZD, there is a high likelihood that EURUSD will reach 1.2185. FX players are betting on a turnaround in the EURGBP cross pair after the recent pullback. Buyers need to gain a foothold above 1.2167 as quickly as possible, after which upward movement should go like clockwork.

Stateside, Senate Majority Leader Chuck Schumer predicted that the $1.9 bln Covid relief bill would be passed before March 14 (positive for risk-sensitive assets). Powell is slated to address the House Financial Services Committee later today.

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