- EUR/USD alternates gains with losses just above 1.0800.
- The greenback clinches new highs around 100.50 on Wednesday.
- US Producer Prices will be the salient release later in the NA session.
EUR/USD now manages to attempt a tepid rebound after hitting new 5-week lows near 1.0810 earlier on Wednesday.
EUR/USD keeps looking to USD, ECB
EUR/USD partially reverses Tuesday’s moderate retracement and regains some composure after briefly approaching the area of YTD lows in the 1.0800 neighbourhood earlier in the session.
As usual, the continuation of the march north in the greenback pushed the US Dollar Index (DXY) to clock new peaks in levels last seen back in May 2020 around 100.50, always on the back of the resumption of the upside momentum in US yields following Tuesday’s post-CPI hiccup. In the German cash market, the 10y bund yields follow suit and flirt with recent tops around the 0.85% area.
In the meantime, the European currency remains under pressure and keeps the cautious note well and sound against the backdrop of the vacuum of news from the Russia-Ukraine military conflict and the upcoming ECB event (Thursday).
Nothing noteworthy in the domestic calendar, whereas Producer Prices wil be the sole publication across the pond.
What to look for around EUR
Sellers continue to rule the sentiment around EUR/USD, which extended the downtrend to fresh lows in the vicinity of 1.0810 midweek. The multi-week negative performance of the pair comes in response to the firmer pace of the greenback and renewed geopolitical concerns. As usual, occasional pockets of strength in the single currency should appear reinforced by speculation the ECB could raise rates before the end of the year, while higher German yields, elevated inflation, the decent pace of the economic recovery and auspicious results from key fundamentals in the region are also supportive of a rebound in the euro.
Key events in the euro area this week: ECB Interest Rate Decision (Thursday).
Eminent issues on the back boiler: Asymmetric economic recovery post-pandemic in the euro area. Speculation of ECB tightening/tapering later in the year. Second round of the presidential elections in France. Impact on the region’s economic growth prospects of the war in Ukraine.
EUR/USD levels to watch
So far, spot is up 0.06% at 1.0833 and faces the next up barrier at 1.0933 (weekly high April 11) seconded by 1.1000 (round level) and finally 1.1123 (55-day SMA). On the other hand, the break below 1.0811 (monthly low April 13) would target 1.0805 (2022 low March 7) en route to 1.0766 (monthly low May 7 2020).