The EUR/USD currency pair has been gaining ground amidst a risk-on sentiment in the market. On Friday, the pair rose to a two-day high of 1.0665/70, reflecting the optimism around the European currency and the risk complex in general.
One of the main factors driving this trend is the recent decline in the US dollar, which has been correcting itself after a period of strength. The greenback has been under pressure as investors turn their attention to riskier assets, such as stocks and commodities, in the wake of positive economic data and the rollout of COVID-19 vaccines.
Euro Docket: Final Inflation Figures
The upcoming events in the euro docket are also contributing to the optimism around the European currency. The next event of note is the release of the EMU final inflation figures, which are expected to provide insights into the state of the eurozone economy.
Analysts expect the inflation figures to be in line with the European Central Bank’s (ECB) target of 2%, which could provide further support to the euro. However, any surprises in the data could lead to a volatile reaction in the currency markets.
Outlook for EUR/USD
Looking ahead, the outlook for the EUR/USD currency pair remains positive, although there are some risks to this trend. One of the key risks is the ongoing COVID-19 pandemic, which could lead to renewed lockdowns and economic uncertainty in the eurozone.
Another risk is the possibility of a resurgence in the US dollar, which could be triggered by a shift in market sentiment or a change in US economic policy. However, these risks are currently outweighed by the positive factors driving the euro higher.
In conclusion, the EUR/USD currency pair is rising amidst a risk-on sentiment in the market, driven by a decline in the US dollar and positive events in the euro docket. The upcoming release of the EMU final inflation figures could provide further support to the euro, although there are some risks to this trend. Overall, the outlook for the euro remains positive, although investors should remain cautious and monitor the market closely.
