FX Signals - Euro Rises Above Key $1.20

FX Signals - Euro Rises Above Key $1.20

Bloomberg) -- The euro rose above $1.20 for the first time in more than two years amid broad dollar losses.

Europe’s common currency advanced as much as 0.6% to $1.2011 before settling back to around $1.1990. Investors remain optimistic on its outlook, with speculators holding a record bullish position. In contrast, the Bloomberg Dollar Spot Index touched a two-year low.

The euro has rallied more than 10% since late March when the coronavirus pandemic roiled markets. The European Union’s policy response to the virus has supported the euro, while the U.S. Federal Reserve’s move to slash rates to zero and inject massive amounts of liquidity have undermined the dollar.

Last week, the Fed announced a policy shift that’s likely to keep interest rates lower for longer and the greenback under pressure.

“U.S. money supply expansion and Fed’s QE, along with U.S. deficits are all dollar negative and benefit the likes of the euro, especially in light of the Next Generation EU fund,” said Shyam Devani, chief strategist at SAV Markets in Singapore. “I expect a major rally on EURUSD through the long-term resistance levels just below 1.21, beyond there we would be looking at the 1.25 handle.”

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FX Signals - Euro Rises Above Key $1.20

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