DOLLAR PRESSURE REDUCED ON EURUSD!
We have seen that the attacks against 1.19 resistance in the EURUSD parity, which were weak throughout the week, gained momentum. While the Services PMI activities in the Euro Zone exceeded the expectations with 49.6 in March, the IMF revised its 2021 growth expectation for the Euro Area upwards by 4.4 percent. ECB Executive Council Member Klaas Knot stated that the existing PEPP volumes can be adjusted flexibly if appropriate. Knot also underlined that while this situation will not end the monetary easing of the ECB, a strong recovery is expected in the second half of the year. Knot announced that it thinks the ECB could reduce PEPP in Q3 and end acquisitions in March 2022. Following these announcements, although the Euro version had mild tension, the parity's rising trend continued to rise with the weak dollar effect in the general scenario.
If we look at the US side, it is seen that US President Joe Biden consults with important institutions the details of the tax plan that will finance the $ 2.3 trillion infrastructure package announced. It is also noteworthy that there are institutions that support Biden, stating that the corporate tax rate will be increased from 21% to 28%. In the official reports announced by the FOMC, it was emphasized that asset purchases will continue until significant progress is achieved in low unemployment and inflation targets. In addition, some members shared their views on the fact that strong demand may cause inflation above expectations. After this development, the effect of the bond interest rates, which weakened with the dollar index, which decreased slightly, did not change much. Risk appetite in the markets increased after Fed Chairman Powell announced that they did not expect a permanent rise in inflation. In the USA, unemployment benefit applications increased to 744 thousand in the week ending April 3, contrary to market expectations.
In line with these developments, the pair has climbed above the 1.19 level, although the potential for a pullback has arisen this morning, but the overall picture remains upward. Especially if the resistance level remains above 1.19, the buy potential in the pair may gradually reach the resistance thresholds of 1.1958 and 1.20. However, in a thaw below 1.19, 1.1850 remains our first support threshold. Below this level, we are following the decreases within the frame of 1.18 and 1.1750 support levels.