- EUR/USD remains in supply and near the 1.0900 mark.
- ECB Lagarde, af Jochnick will speak later in the meeting.
- Markets’ attention will be focused on the release of flash PMIs.
Bulls remain in control of sentiment around the European currency and motivate EUR/USD to flirt with the 1.0900 area again on Tuesday.
EUR/USD looks at data, risk trends
Following Monday’s marginal gains, EUR/USD is accelerating further and extending further north to the 1.0900 mark on Tuesday’s reversal. So far, the pair is cruising through its third straight week of gains after plunging at the very beginning of the new year.
Meanwhile, the ECB’s hawkish talk of late has helped sustain bullish price action in the pair, which has gained more than 4 cents from monthly lows near 1.0480 hit on January 6.
On the domestic calendar, consumer confidence in Germany tracked by GfK improved to -33.9 for the month of February. Later in the morning in Europe, advanced PMI prints for Eurozone manufacturing and services and the US economy will be in focus. In addition, the Chairman Lagarde Board member Jochnick is also scheduled to speak.
What to look for around EUR
EUR/USD is once again flirting with the 1.0900 neighborhood after Monday’s climb to a new 9-month high.
Price action around the European currency should continue to closely monitor the dynamics of the dollar, as well as the impact of the energy crisis on the euro bloc and the Fed-ECB divergence.
Back in the eurozone, growing speculation about a possible recession in the bloc is emerging as an important domestic headwind against the euro in the short term.
Key events in the Eurozone this week: Germany GfK Consumer Confidence, France Business Confidence, ECB Lagarde, EMU/France/Germany Advanced Manufacturing/Services PMIs (Tuesday) – Germany Ifo Business Climate (Wednesday) – Italy Business Confidence (Thursday) – France Consumer Confidence, ECB Lagarde (Friday ).
Eminent problems on the rear boiler: The ECB’s hiking cycle continues amid declining bets on a recession in the region and still elevated inflation. The impact of the war in Ukraine and the protracted energy crisis on the bloc’s growth prospects and inflation outlook. Risks of entrenched inflation.
EUR/USD levels to watch
So far, the pair gains 0.26% to 1.0896 and faces another upside barrier at 1.0926 (2023 January 23 high), followed by 1.0936 (April 21, 2022 weekly high) and finally 1.1000 (round level). On the downside, a breakdown of 1.0766 (weekly low on January 17) would target 1.0560 (55-day SMA) on the way to 1.0481 (monthly low on January 6).