-
EUR/USD adds to Tuesday’s uptick north of 1.0900.
-
US Dollar remains offered amidst the lack of traction in yields.
-
US CPI, FOMC Minutes next of note across the pond.
The buying interest around the European currency remains well and sound and lifts EUR/USD further north of 1.0900 the figure on Wednesday.
EUR/USD looks firm in pre-CPI trade
EUR/USD is advancing for the second session in a row and looks to consolidate its recent breakout of the key 1.0900 barrier amid continued selling pressure around the greenback.
Indeed, investors continue to sell the dollar and favor more strength in the pair as speculation of another soft print on US inflation (due later) could reinforce the idea that the Fed may pause its hiking cycle in May.
From the ECB, there is no change so far in its view of a rate of 25 bps likely in May, a view that is being fueled by dovish comments from the ECB’s rate-setters.
Nothing data-wise due on the old continent on Wednesday should focus on the release of the US CPI and the release of the FOMC minutes after the NA session.
What to look for around Euro
The Euro advances beyond the 1.0900 hurdle versus the US Dollar in response to the renewed weakness in the buck and further recovery in the risk-linked complex.
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 continues 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: 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 0.10% at 1.0920 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 1.0747 (55-day SMA) and finally 1.0712 (low March 24).
