- EUR / USD continues to gain positive traction for the fourth day in a row on Thursday.
- Bullish Eurozone PMIs on Wednesday and sustained selling around the USD continue to support the pair’s upward move.
- The slightly overbought daily RSI warrants some caution before opening aggressive bullish positions.
The pair EUR/USD kept its buying tone intact during Thursday’s European session, rising to its new highest level since April 2018 in zone 1.2240 / 45 after advancing about 55 pips since the beginning of the day. At time of writing, the pair is trading above 1.2234, gaining 0.42% on the day.
The pair advances for the fourth day in a row on Thursday and has built on the previous day’s bullish breakout momentum above the previous yearly highs, around the 1.2175-80 region. The common currency remains backed by upbeat euro zone manufacturing PMI figures. This, coupled with the prevailing bearish sentiment around the US dollar, has provided additional boost to the EUR / USD pair.
The preliminary version of the Eurozone PMIs, released on Wednesday, showed that manufacturing sector activity expanded faster than expected and the service sector contracted less than expected. The data added to optimism that the region’s economy is beginning to stabilize and that the recovery is gaining ground, which, in turn, has been seen as a key factor that boosted the common currency.
On the other hand, USD sell bias continues unabated due to optimism on the launch of the COVID-19 vaccine and expectations of additional fiscal stimulus measures in the US In fact, it was reported that Republicans and Democrats were closing in on passing a $ 908 billion aid package. Congress is also working to pass a $ 1.4 trillion spending bill by Friday to avoid a government shutdown.
Other than this, the current upward movement could be attributed to some technical buying after a sustained move above the 1.2200 level. Meanwhile, the RSI on the daily chart already shows mild overbought conditions and warrants a short-term consolidation or modest pullback before the next move. That said, the path of least resistance for the EUR / USD pair continues to the upside.
Market participants are now looking forward to the US economic calendar, highlighted by releases from the Philadelphia Fed Manufacturing Index, initial weekly jobless claims and housing market data. This, coupled with broader market risk sentiment, will influence USD price dynamics and could generate some short-term trading opportunities around the EUR / USD pair.
EUR / USD technical levels
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