- Positive risk mood in the market bolstering Euro higher.
- Bets that the ECB will expand the size of its Pandemic Emergency Purchase.
EUR/USD risen around 0.4% through the previous days Asian session, pushing prices to their highest since mid March, with an eyes on the 1.12 level next.
The Euro has now been on a seven day rally, the longest rally since December 2013. After overcoming its March resistance at 1.1163 and the 0.618 fibonacci resistance at around 1.1167, there is now little resistance in the way to see 1.12 being met.
EUR/USD may find it difficult to push above the 1.12 level as this pair enters overbought territory on the RSI.
The EUR/USD rally was initially triggered by the EU Commission’s relief package proposal.
It is important to recognise that this proposal still needs to be accepted by all 27 members of the EU. Most recently, this pair has seen appreciation on the backend of USD weakness triggered by greater risk appetite.
Rumours that the ECB will expand the size of its Pandemic Emergency Purchase Program may also be lifting the currency.
Roughly three-quarters of economists surveyed by Bloomberg last week anticipate that the bank will increase the program’s size at its meeting on Thursday, with the median estimate expecting a €500bn top-up. This could keep the Euro supported until further details are revealed on Thursday.