Euro higher as US yields dip

The euro is listless in the Monday session. Currently, EUR/USD is trading at 1.1757, down 0.02%.

Eurozone faces turning point with vaccine rollout

Europe has been hit with a third wave of Covid, as the pandemic continues to weigh on economic growth. The vaccine rollout early in 2021 had brought with it the hope of overturning the Covid crisis. Instead, the rollout has been beset by a troubled start and a skeptical public, due to suspected side effects from the AstraZeneca vaccine. France and Germany have imposed stricter lockdowns due to soaring infection rates, and well-respected forecasters such as JP Morgan and UBS have been forced to cut eurozone growth forecasts for 2021.

Will the eurozone economy show better numbers in Q2? That will depend in large part on a smoother vaccine rollout and the gradual lifting of health restrictions. So far, only 10% of EU residents have received at least one dose, but if these numbers rise significantly, we should see a pick-up in the EU economy. The ECB is projecting growth of 1.7% in the second quarter, and the rate of growth should increase if the rollout gets on track and consumers can get out and spend.

On Friday, US nonfarm payrolls outperformed, with a reading of 916 thousand, up from 379 thousand a month earlier. This figure easily beat the forecast of 652 thousand. With the US recovery gaining traction and the Biden administration pouring trillions of dollars into the economy, we can expect upcoming NFP prints to be above the one million level. That assumes that there are no hiccups in the vaccine rollout, which has been successful so far. The US dollar didn’t show much reaction to the blowout release, and EUR/USD showed little movement on Friday.

EUR/USD Technical

• The euro is moving towards resistance at 1.1803. Above, there is resistance at 1.1844
• On the downside, we find support at 1.1713, followed by support at 1.1664

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