EUR/USD extends the uptrend, targets the March top near 1.0760
|- EUR/USD adds to the recent breakout of 1.0700.
- Germany, EMU Economic Sentiment due next in the docket.
- The Fed is widely expected to hike rates by 25 bps on Wednesday.
The better tone in the dollar does not prevent EUR/USD from climbing further, this time hitting new multi-session highs around 1.0740 on Tuesday.
EUR/USD looks bid ahead of data, FOMC
EUR/USD trades with gains for the fourth session in a row and pushes higher following the recent breakout of the key 1.0700 barrier.
The daily improvement in the pair comes despite the tepid rebound in the greenback and seems to follow the persevering hawkish narrative from some ECB-speakers, who appear to favour a 25 bps rate raise at the May event.
Further support for the European currency comes in response to another daily uptick in the German 10-year Bund yields, this time regaining the 2.20% barrier and beyond, a move that echoes the ongoing bounce in their US peers.
An interesting docket in the euro area will see the Economic Sentiment tracked by the ZEW institute in both Germany and the broader Euroland ahead of another speech by Chairwoman Lagarde.
Across the pond, Existing Home Sales and the start of the 2-day FOMC gathering will take centre stage.
What to look for around EUR
EUR/USD keeps the bid bias well in place and climbs to fresh tops well north of 1.0700 the figure, extending at the same time the auspicious start of the new trading week on Tuesday.
In the meantime, price action around the European currency should continue to closely follow dollar dynamics, as well as the potential next moves from the ECB in a context still dominated by elevated inflation, although amidst dwindling recession risks for the time being.
Key events in the euro area this week: EMU, Germany ZEW Economic Sentiment, ECB Lagarde (Tuesday) - ECB Lagarde (Wednesday) – EMU Flash Consumer Confidence, European Council Meeting (Thursday) - European Council Meeting, EMU, Germany Flash PMIs (Friday).
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 0.18% at 1.0736 and the break above 1.0759 (monthly high March 15) would target 1.0804 (weekly high February 14) en route to 1.1032 (2023 high February 2). On the flip side, there is initial support at 1.0516 (monthly low March 15) seconded by 1.0481 (2023 low January 6) and finally 1.0327 (200-day SMA).
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