Euro is still trying to record the bullish candle along the first quarter of this week. However, its momentum is getting slower and EUR/USD is now quite defensive around the level of 1.1865. The EUR/GBP rally effort was also rejected by the resistance level around 0.8650.
Some analysts predicted that the Euro weakened to dollar is not ended yet and the Single currency is maybe will be recovered ahead the end of this year. The US economic has been showing an impressive performance recovery lately. That is not the only thing.
There are several factors that support the USD appreciation. The most focus is know the United States that has the amazing fiscal support. The normalization of economic activity and vaccination effort have support the rebound hope in the market. That becomes a good sign.
The Different Speed of Vaccination and Its Impact
The different gap in vaccination program progress between any areas has the bad impact for EUR. It is because the European Union is still on its concern about the vaccine reliability. It is especially the AstraZeneca and the rumour of export blockage spread in the society.
Furthermore, the third wave of COVID-19 infection hits the European Union really hard. France planned the new national lock down decision started from last week. Meanwhile, Italy and Germany will make their lock down is longer for the safety reason in that country.
For your information, the lock down there has been started since some weeks ago. A forex expert stated that the good thing about US dollar in the first quarter of 2021 has been forcing them to revise the EUR / USD prediction in the future.
He said that the EUR / USD decline potential Is maybe not ended yet. The further correction may happen until that pair reaches the 1.16 / 1.15. At the same time, UniCredit is still on their decision which that pair is finally will be increasing again.
Why That Pair can Increase Again?
The EUR / USD pair may increase again due to then smaller gap of yield and the recovery of EuroZone economic. The vaccination program there is maybe showing the real progress in several weeks or months in the future. That is why; the hope is there.
That pair has a possibility to back and reach the 1.18 in the 2021 third quarter. The further stabilization will reach 1.22 in the fourth quarter. The index of dollar stuck on its lowest record in two weeks. That was under the level of 92.50 in yesterday sale.
The FOMC release yesterday morning was not offering the new opinion at all. That makes the US yield obligation rally and USD lost their momentum. The American dollar is weakening to most of the major currencies except Euro which has the weaker outlook.
A report released by FOMC signed that the Fed’s delegates still so careful in taking an action the risk of COVID-19 pandemic. It is although the macro-economic data of America is accelerated quickly because the massive stimulus given by Joe Biden.
The Fed Notulen doesn’t give the Negative Progress
The Notulen from the Fed does not give any negative surprises for the risk sentiment. The committee stated that they are not in a rush to tighten the monetary condition and will always support the recovery. The low interest rate is still becoming an opinion.
They predicted that the verry accommodative The Fed later will weight in USD. It is especially when they enter the dry season because the increasing inflation. However, there isn’t any signs about the interest rate increase may support the short-term US real rate.
They may not move further to the negative area and added by the global economic recovery which will be more synchronized in the second quarter of 2021. As a respond to that FOMC report, the obligation yield in America is now weakening.
