EUR/USD: Euro trades higher as US Dollar selloff prevails
- EUR/USD rose to the highest level in 4-days at $1.2356 on Tuesday.
- US Dollar is softer on data light Tuesday headlined by the Cleveland Fed governor Mester speech.
- Key US inflation data are due on Wednesday.
The US Dollar is on a softer side on Tuesday as the European equity markets follow the Asian market pattern in closing lower and the US fiscal sustainability is questioned by investors.
The EUR/USD is trading up 0.3% at around $1.2345 against the US Dollar after the currency jumped as high as $1.2356 earlier on Tuesday, the highest level in the last 4-days.
Roots of the US Dollar weakness
The EUR/USD is currently moving within the upward rising trend channel since London noon on Monday. The risk associated sentiment is currently against the US Dollar after last week’s equity market rout that has favored the US Dollar as a safe haven currency.
Adding to the US Dollar weakness is the skepticism about the long-term sustainability of the US fiscal position after the US President presented the budget proposal that shakes off any signs of sustainability while it is boosting infrastructure projects and other domestic spending projects including the Wall.
Meanwhile, the index of small business optimism rose the all-time high of 106.9 in January, up from 104.9 in December in a sign of good times rolling in the US. Small business owners report having hard times finding qualified workers for open positions, but wages for qualified workers are rising at the highest rate since 2000 and among the highest in the 45 years of the survey.
The key macroeconomic data in the US are due tomorrow February 14, with the US CPI and retail sales for January out.
The EUR/USD is currently in an uptrend that has started this Monday and continues to target $1.2265 representing the 50% Fibonacci retracement of the fall of EUR/USD from $1.2520 to $1.2200 from Friday last week.
EUR/USD 15-minute chart