Euro bulls didn’t get what they might have been looking for at yesterday’s ECB’s press conference. European Central Bank President Christine Lagarde said the ECB is not discussing to back out of its emergency bond buying program even as the central bank sees signs that the economy is picking up later this year. “The progress with vaccination campaigns, which should allow for a gradual relaxation of containment measures, should pave the way for a firm rebound in economic activity in the course of 2021,” Lagarde said.
Even though a hawkish rhetoric from the ECB was unlikely and premature at yesterday’s meeting, the euro took a brief look above 1.2060 before it came under increased selling pressure after there were no hints on the pace of the ECB’s PEPP program beyond Q2.
Technically, as long as the EUR/USD remains above 1.20 we see chances in favor of the bulls with next targets at 1.21 and 1.2130.
The GBP/USD corrected some of its gains towards 1.38 after the pair was unable to overcome the short-term 1.3950-resistance. As long as the cable remains below 1.39, we expect a deeper correction towards 1.3780 and possibly even 1.3750. Traders will watch the U.K. PMI report today at 8:30 UTC.
Elsewhere, stock investors captured some gains after President Joe Biden was said to propose almost doubling the capital-gain tax for rich investors, which could be as high as 43.4 percent for those earning $1 million or more. This has led to profit taking in the market while stocks dropped and the U.S. dollar advanced.
The DAX dropped from an intraday high at 15339 towards 15200 amid profit taking. Remaining below 15300 we will favor bearish momentum with the focus being on the crucial support at 15000.
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