The EUR / USD pair continues to move upward on Tuesday. A new 4-week high was set in Asian trading. The main driver of growth is still the US dollar, whose index today dropped to 6-week lows.
Investors are selling the American currency before the speech of the head of the Fed in the relevant Senate committee. Jerome Powell will present a semi-annual report on the work of the Fed. Powell is expected to once again announce a new approach to inflation targeting and reassure lawmakers and the market that the regulator will not immediately tighten monetary policy if inflation rises. Such statements can increase the pressure on the dollar.
The data from The Conference Board may also have a strong impact on the dollar today. Experts predict an increase in the indicator from 89.3 to 90.0 points.
In Europe today, the focus will be on consumer price index data for January. In our opinion, the published report will have a very restrained impact on the market. Inflation in the Eurozone remains significantly below the target levels, therefore, they do not yet have an impact on investors' expectations regarding possible changes in ECB policy. Christine Lagarde said Monday that the ECB continues to implement a massive € 1.85 trillion asset buyback program. The PEPP program supports all sectors of the EU economy.
On the chart, the currency pair is testing the resistance level of 1.2170. So far, we do not see a strong price reaction to this mark, therefore, we consider the scenario with the further development of the upward movement and an attempt to gain a foothold above 1.2190 as the main one.
Resistance levels: 1.2170, 1.2190, 1.2275.
· Support levels: 1.2130, 1.2090, 1.1960.
The main scenario is a pullback to 1.2130 and growth above 1.2190.
Alternative scenario - growth above 1.2190 from current levels.
The current fundamental background is moderately positive. We are considering buying from the level 1.2130.