EUR/USD touches $1.22 as Eurozone economic sentiment hits 11-month high

The euro was catapulted higher on Thursday thanks to robust economic sentiment and the weakness of the US dollar.
 
Meanwhile, the pound finds itself under pressure this morning, with GBP/EUR sliding to €1.1471 and GBP/USD tumbling to $1.3934. GBP/CAD has slumped to C$1.7573, while GBP/AUD and GBP/NZD are muted at AU$1.7778 and NZ$1.8965, respectively.
 
Looking ahead, the focus today will be on the latest US economic releases, with a rebound in consumer spending last month potentially buoying the US dollar.
 

What’s been happening?

The euro struck higher during yesterday’s session, initially receiving a boost as economic sentiment in the Eurozone in February was reported to have risen to its best levels since March last year.
 
Reinforcing this upswing in the single currency was its negative correlation with the US dollar, which bolstered the appeal of the euro as USD exchange rates weakened.
 
This pullback in the US dollar came as the appeal of the safe-haven currency was knocked by a prevailing risk-on mood.
 
However, these losses were trimmed somewhat in the second half of the European session in the wake of some positive USD data releases, with the latest US durable goods reading and initial jobless claims figures both beating expectations.
 
The pound, meanwhile, was mostly muted through Thursday’s session, with GBP investors appearing content to consolidate their gains ahead of next week’s budget.
 

What’s coming up?

Turning to today’s session, the only data of note will come from the US, with the release of the latest personal spending figures and PCE price index.
 
The spending figures could provide some lift to the US dollar this afternoon, on the expectation that consumer spending will have rebounded sharply at the start of 2021, while the accompanying price index could also prove supportive of USD exchange rates as the Federal Reserve’s preferred measure of inflation is forecast to accelerate over the same period.
 
Meanwhile, the pound could face some additional pressure today as the currency is likely to be vulnerable to some end-of-month profit taking.
 
Finally, in the absence of any notable Eurozone data releases, the euro could struggle today, particularly if the focus turns back to the EU’s woeful vaccine rollout.