The Euro continues to push higher in today’s trading session, following on from Friday’s jump as speculations mounts that the US Federal Reserve may hold off a little longer with regards to reducing the stimulus program over concerns of the spread of the Delta covid variant.
The EUR/USD currency pair had been under pressure for the most part of last week as market participants began pricing in a reduction of the bond buying program from the Fed as well as a possible interest rate hike in the first part of 2022.
That all changed over the weekend as Dallas Federal Reserve President Rob Kaplan, who was previously one of the moist hawkish board members and had been calling for the tapering of bond purchases in September did a complete about turn.
Mr Kaplan is now open to the possibility that the Fed may need to delay its plans when it comes tightening monetary policy and noted that the US central bank may need to postpone the start of tapering program with regards to the $120 billion per month in bond purchases until it gets the Delta Covid variant under control which is currently spreading like wildfire.
The question is now, will any more US Federal reserve board members come out in support of a delay to the tapering program, and should this eventuate, the Euro may receive a further boost against the greenback
The main drives of the EUR/USD currency pair today will be the release of the Preliminary Manufacturing and Services PMI reports from Germany and the Eurozone and later in the day we will see the same PMI figures from the US during the American trading session.
On the chart we can see the Euro received some major support at the $1.1675 level which was a 9-month low against the US dollar and has recovered around 30 points to $1.1710 as we enter the European trading session and seems to have become a somewhat resistance level over the past 3 trading sessions.
There will need to be a clean break of this level for the Euro to continue any meaningful rebound and unless the PMI figures from Europe come in well above expectations, it is hard to see the Euro moving significantly higher in today’s trading session and it is likely to stay in the $1.1675 - $1.11710 trading range.