European currencies recover losses against the US dollar. Biden’s stimulus plans have had an adverse effect on the greenback. Investors are now reluctant to buy the US currency given that unprecedented amounts of money are being printed to finance the president’s initiatives.
The euro has strengthened despite disappointing German statistics. Of course, it is all relative, because the reading improved but came out slightly less than market expectations. Thus, the trade surplus in Germany widened to €20.5 billion. It is the highest trade surplus since October of 2019. Likewise, exports and imports also increased.
At the same time, Germany's industrial production rose by 2.5%, following two months of decline. It was the largest output increase since last October. On a yearly basis, industrial production advanced by 5.1%. The reading had been forecast to grow by 5.7%.
The upward trend on EUR/USD, that started last year, resumed. The pair’s recent downward movement was just a correction. Traders had no reason to push the price further down and kept the price above the psychological mark of 1.20. Yesterday, the quote went up, slowing down at 1.2060 on positive US jobless claims data.
According to the current chart, the pair keeps signalling to bulls to return to the market. The price broke the important level of 1.2072. At the moment of writing, it was trying to consolidate above the mark. Traders are cautious ahead of the publication of employment data in the US, which may cause an increase in market volatility.
The pound is stable at 1.39 after the Bank of England announced it would keep monetary policy unchanged and cut the target for bond purchases to £3,400 million per week. In addition, the regulator revised its GDP forecast upward.
Traders are watching closely the following levels of GBP/USD: 1.3835, 1.3886, 1.3931 and 1.3975. Overall, the bullish trend is highly likely today but it may change when the NFP report is published.
Strong NFP data is expected today. In fact, given the situation with the stimulus plans in the US, the market ignored the previous report. It remains to be seen how the market reacts to the upcoming publication.