- EUR/USD adds to Wednesday’s advance past the 1.0900 mark.
- The ECB gathering will be the salient event in the old continent.
- Retail Sales, Consumer Sentiment will be in the spotlight in the NA session.
Buyers seem to have returned to the shared currency and now lift EUR/USD back above the 1.0900 yardstick, or fresh 3-day highs.
EUR/USD focuses on the ECB
EUR/USD advances for the second session in a row on Thursday against the backdrop of renewed and persistent selling pressure in the US dollar and declining US yields.
In fact, the rally in US yields continues to take a breather, as recent US inflation figures seem to have sparked speculation among market participants that inflation could have reached or is close to a top. In the German cash market, the 10y bund yields look side-lined in the upper end of the range around 0.80%.
No news from the geopolitical front leaves the risk appetite trends somewhat muted following latest news that negotiations to find a diplomatic solution to the military conflict between Russia and Ukraine have apparently entered a dead-line, as per Russia’s V.Putin.
In the calendar, the ECB event will take all the attention later in the session seconded by the usual press conference by Chair Lagarde.
Across the pond, Retail Sales, Initial Claims, the U-Mich Index and Business Inventories will be published.
What to look for around EUR
EUR/USD regained some composure alog with the area above the 1.0900 mark and ahead of the ECB event on Maundy Thursday. Despite the ongoing recovery, the outlook for the pair remains well into the bearish side for the time being, always in response to dollar dynamics and 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 0.17% at 1.0907 and faces the next up barrier at 1.0933 (weekly high April 11) seconded by 1.1000 (round level) and finally 1.1120 (55-day SMA). On the other hand, the break below 1.0808 (monthly low April 13) would target 1.0805 (2022 low March 7) en route to 1.0766 (monthly low May 7 2020).