The last day of the week before the Easter holiday period started with an erratic behaviour for assets, typical of quarterly closing periods.
The North American economic figures published yesterday helped the U.S. Dollar strengthen, with the GDP for the fourth quarter rising to 4.3 versus 4.1 expected. Initial jobless claim figures improved substantially, with unemployment claims falling to 684k from 781k the previous week. President Biden's promises to double the vaccination rate in the coming months helped improve the market sentiment and led the North American currency higher.
EUR/USD fell to the 1.1760 zone. This level is in a price concentration zone that could act as immediate support. Only below a lower level (around 1.1615) could lead to a bearish continuation that would point towards lows such as 1.1430.
But today, the pair experienced an upward movement that can be considered corrective, and that has taken it to the pivot level of 1.1800.
Germany in the spotlight.
This euro’s rise came after Germany’s IFO figures were published, showing a notable surge to 96.6 from 92.7 the previous month.
The manufacturing sector in Germany continues to grow, driven mainly by increased exports to countries that have already started to improve, such as the United States and China. But the IFO report also points out that the first quarter of the year is not going to be so positive for Germany, and there will probably be a contraction in GDP again due to the new lockdowns. In this sense, the Bundesbank has also stated that it expects negative GDP figures in the first quarter. The lockdown imposed by governments, not only in Germany but also in France and Italy, could negatively affect the European economy's recovery, especially in the services sector.
More U.S data coming.
Meanwhile, the markets are waiting for U.S.' consumer spending data scheduled for today. In case the figures show a recovery, the yields of the Treasury bonds could go up.
The immediate effect of this movement is observed in the price of the USD/JPY, a pair correlated with the American treasury bond yields. This pair continues its upward path and is already very close to the pivot level around 109.60, the highest since June last year.
Sources: bloomberg.com, reuters.com.
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