- EUR/USD leaves behind Monday’s retracement and retakes 1.0900.
- The dollar struggles to extend the rebound amidst lower yields.
- EMU Investor Confidence surprised to the upside in April.
The single currency regains upside traction and lifts EUR/USD back above the 1.0900 yardstick on turnaround Tuesday.
EUR/USD looks at data, USD
EUR/USD so far reverses two consecutive daily pullbacks and manages to advance to the area beyond 1.0900 the figure on the back of some corrective weakness in the greenback and the marked rebound in the risk complex.
Also collaborating with the bounce in the pair emerges another positive performance of the German 10-year Bund yields, which approach the 2.30% region and add to Thursday’s gains.
In the meantime, investors continue to gauge a most likely 25 bps rate hike by both the ECB and the Federal Reserve. The likeliness of a move on rates on the latter has gathered pace following the solid US jobs report published on Friday.
Closer to home, the Investor Confidence tracked by the Sentix Index in the broader Euroland improved to -8.7 in April, while Retail Sales in the region are due later.
What to look for around EUR
EUR/USD clings to the 1.0900 region following the marked retracement seen in the last couple of sessions.
In the meantime, price action around the single currency should continue to closely follow dollar dynamics, as well as the incipient Fed-ECB divergence when it comes to the banks’ intentions regarding the potential next moves in interest rates.
Moving forward, hawkish ECB-speak continue to favour further rate hikes, although this view appears in contrast to some loss of momentum in economic fundamentals in the region.
Key events in the euro area this week: EMU Sentix Index, Retail Sales (Tuesday) – Germany Final Inflation Rate, EMU Industrial Production (Thursday).
Eminent issues on the back boiler: Continuation, or not, of the ECB hiking cycle. Impact of the Russia-Ukraine war on the growth prospects and inflation outlook in the region. Risks of inflation becoming entrenched.
EUR/USD levels to watch
So far, the pair is gaining 0.44% at 1.0901 and a break above 1.0973 (monthly high April 4) would target 1.1032 (2023 high February 2) en route to 1.1100 (round level). On the flip side, the next support comes at 1.0788 (monthly low April 3) followed by 1.0746 (55-day SMA) and finally 1.0712 (low March 24).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
