The anti-risk U.S. dollar came again under selling pressure as investors bet on additional U.S. fiscal stimulus. While progress on the vaccine front is providing hope to investors banking on an economic recovery, there are concerns over the speculative excess that is driving stock markets to record highs in the middle of the pandemic.
The cable broke above 1.36 and traders wonder whether a test of 1.3750 or 1.3770 will follow. More gains might be possible, but the pair trades in overbought territory, increasing the likelihood for a correction. The former resistance and breakout level at 1.36 could now serve as a support.
The euro gained some ground after finding a halt around 1.2140-30. If the pair is able to hold above 1.2170 and 1.2140 traders should expect a renewed test of 1.2270 and possibly 1.23.
DAX: If the index slips significantly below 13900, we expect lower targets at 13600/13500. If the support at 13900 proves, however, intact, we anticipate further bullish momentum towards 14100 and possibly even 14300.
Key events for today:
- European Central Bank President Christine Lagarde speaks at an online conference.
- U.S. Consumer price inflation figures are due at 13:30 UTC.
- Subscribe to our daily signal service
We wish you good trades!
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