FX.co ★ EUR/USD: Euro forms growth potential, capitalizing on US dollar's weakness

The Euro currency continued its battle with the US currency this week. Experts note some weakness in the dynamics of the US dollar due to the endless race for leadership.

The morning of April 14 began with the US dollar's significant decline. The indicated currency has sharply fallen in relation to the Euro amid reduced concerns about inflation. After updating for at least a few weeks, the USD tried to increase, but its attempts ended unsuccessfully. Today, the EUR/USD pair was trading near the range of 1.1964-1.1965, making use of the US inflation data. It can be recalled that American consumer prices rose by 2.6% in annual terms, and by 0.6% in monthly terms.

Experts recorded the collapse of the US dollar amid the decline in the yield of 10-year US government bonds, which plunged to 1.620%. As a result, the attractiveness of the US currency was reduced. According to analysts, the EUR/USD pair will decline if the trend of falling USD and rising yields continues in the near future.

The economic situation in the Eurozone influenced the dynamics of the EUR/USD pair. In particular, the data on the volume of industrial production, which are expected on Wednesday, April 14. It can be recalled that this figure fell by 1.1% on a monthly basis in the last month of winter. Now, we expect it to decline by 0.9% on an annualized basis. The euro's potential growth is influenced by the COVID-19 situation in view of the use of the vaccine from Johnson & Johnson (J&J). It is worth noting that the euro outperformed the US dollar after the J&J vaccination scandal, when six deaths from thrombosis were recorded.

Experts explain the recent growth of the EUR/USD pair with a surge of bullish mood. The potential bullish targets for this currency pair are in the range of 1.1984-1.1985, creating prerequisites for the growth of quotes. Analysts pay attention to the overbought euro, which increases the risk of a downward correction of the main currency pair.

In fact, analysts expect the EUR/USD rally to fade in the short-term as the downward pressure on US rates will be temporary and the outflow of euro funding will continue. As for the mid-term planning range, they expect the pair to rise amid the global recovery of the economy.