EUR/USD holds 1.22 after German GDP downward revision
EUR/USD trades comfortably above 1.22, supported by re-opening optimism in the region as the third wave of covid fades, the vaccine programme ramps up and as lockdown restriction are eased.
German GDP was downwardly revised to -1.8% QoQ vs -1.7%
The US Dollar continues to trade under pressure as inflation fears ebb. Treasury yields edge lower as the Fed continue to hammer home the dovish message. China’s crack down on commodity prices is also helping to ease inflation concerns.
German IFO business sentiment data is eyed. After slipping slightly in April as covid cases rose, sentiment is expected to start edging higher in May, lifting the index to 98.2, from 96.8.
US consumer confidence for May is also due.
Where next for the EUR/USD?
EUR/USD trades above the ascending trendline dating back to early April. Its recent bounce off support at 1.2160, in addition to the bullish RSI create a picture which favours the bulls.
The pair will need to break above 1.2145 high May 19 & Feb 25 in order to advance towards 1.2280 high Jan 8 & Dec 21. Beyond here the January high of 1.2350 comes into target.
A fall below 1.2160 could negate the near term uptrend. A move below 1.2045/60 contention zone could see the sellers gain traction.
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German Dax hits all time high
The Dax, along with other European bourses push higher on Tuesday, tracing an upbeat close on Wall Street as inflation fears recede.
German GDP the final reading for a Q1 was downwardly revised to -1.8% QoQ contraction versus -1.7% previous. The sharp contraction was driven principally by weak private consumption as a result of stricter lockdown restrictions.
After a deep contraction in Q1, there is more potential for a rebound in Q2 economic activity, particularly from June as services reopen.
German IFO business sentiment is due.
Where next for the Dax?
The Dax is pointing higher, extending gains for a fourth straight session as it trades at fresh all time highs at 15600.
The RSI is supportive of further upside whilst it remains out of overbought territory.
It would take a move below 15100 the 50 sma to negate the current near term uptrend. A break through there could see support at 14850 come into play.
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