EUR/USD bounces off lows around 1.1300, back near 1.1350
- EUR/USD finds support near 1.1300.
- The dollar seems offered on the back of lower yields.
- BCE Lagarde, Flash Consumer Confidence soon.
The single currency finds smiles at the end of the week and helps EUR/USD back to the 1.1350 region.
EUR/USD up on dollar weakness
EUR/USD manages to reverse Thursday’s decline and finds buying interest in the 1.1300 area, regaining upside traction shortly thereafter. Recent spot price action is in a consolidation theme, still amid alternating trends in risk appetite across global markets.
Friday’s rise in spot comes amid the position offered to the greenback, which in turn appears under pressure amid a further drop in US yields along the curve.
In the euro calendar, the European Commission (EC) will release its consumer confidence indicator for the month of January as well as speeches by ECB executive board member Fernandez-Bollo and President Lagarde.
Across the pond, the only release will be the leading index tracked by the Conference Board.
What to look for around the EUR
EUR/USD came under pressure after hitting new year-to-date highs in the 1.1480 region earlier in the month, finding some contention in the 1.1300 lows until now this week. In the meantime, policy divergence between the Fed and ECB and yield performance should continue to fuel price action around the pair for now. ECB officials have been vocal lately and now acknowledge that high inflation could last longer in the Eurozone, at the same time sparking fresh speculation that the central bank will change rates by the end of the day. of 2022. On another front, the uninterrupted progression of the coronavirus pandemic remains the exclusive factor to consider when it comes to economic growth prospects and investor sentiment in the region.
Main events in the euro zone this week: ECB Lagarde, EC’s Flash Consumer Confidence (Friday).
Significant problems on the rear boiler: Asymmetric Post-Pandemic Economic Recovery in the Eurozone. Potential position/reaction of the ECB to the persistence of high inflation in the region. Speculative trajectory/declining rates of the ECB. Italy elects the President of the Republic at the end of January. Presidential elections in France in April.
EUR/USD levels to watch
So far, the spot is gaining 0.27% to 1.1341 and facing the next upside barrier at 1.1480 (100-day MMS) followed by 1.1482 (Jan 14, 2022 high) and finally 1.1510 (200 week MMS). On the other hand, a break below 1.1300 (January 21st weekly low) would target 1.1272 (January 4th, 2022 low) en route to 1.1221 (December 15th, 2021 monthly low).