Credit: REUTERS/KAI PFAFFENBACHApril 23 (Reuters) - The European Central Bank's optimism on the economic outlook and weakness in the safe-haven dollar, as the U.S. economy rebounds, provide underlying support for further EUR/USD gains.
There were few surprises from the ECB at Thursday's meeting and the hawks remained quiet . But the central bank predicted a strong economic rebound in 2021, with President Christine Lagarde saying "There are clearly signs of improvement" .
While the coronavirus remains a wild card, euro zone consumer confidence improved in April , and there is certainly light at the end of the tunnel, providing underlying EUR support.
The USD bounced on Thursday after reports President Joe Biden is proposing a historic increase in capital gains taxes . In the bigger picture the dollar is trending lower however, as the robust U.S. recovery gathers pace, encouraging investors to seek riskier assets.
Technically the picture is also positive for EUR/USD, as 5, 10 and 21 daily moving averages head higher with 21-day Bollinger bands, which is a strong trending setup. EUR/USD has stalled around 1.2050, but as long as the gently rising 1.1925 200 DMA holds, the bias remains higher. The 10 DMA has been a base this week and is now initial support at 1.1992.
The target is a test of the 1.2243 February high, with initial resistance at 1.2102, 61.8% of the 2021 fall.
eur apr 23https://tmsnrt.rs/3dIVbbn
(Andrew Spencer is a Reuters market analyst. The views expressed are his own. Editing by Sonali Desai)
((Andrew.m.spencer@thomsonreuters.com))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
