EUR/USD regains upside traction near 1.1380
|- EUR/USD leaves behind Thursday’s downtick and retakes 1.1380.
- The resumption of the risk-on sentiment weighs on the dollar.
- Markets’ attention remains on the Russia-Ukraine conflict.
EUR/USD reclaims ground lost and advances to the 1.1380 region amidst the improvement in the risk-associated space on Friday.
EUR/USD bid on geopolitics, dollar weakness
EUR/USD extends its consolidative theme in the upper end of the weekly range, although still below the key barrier at 1.1400 the figure.
The better mood surrounding the riskier assets remains supported by hopes of a diplomatic solution to the Russia-Ukraine dispute following news of a Blinken-Lavrov meeting at some point next week.
In the US cash markets, yields show some mild recovery after the recent weakness, while yields of the German 10y Bund extends the corrective downside to the sub-0.25% area.
In the euro docket, EMU’s Current Account and Construction Output are due. In the NA session, the Conference Board will release the Leading Index ahead of Existing Home Sales and speeches by Evans, Waller and Brainard.
What to look for around EUR
EUR/USD continues to look to the geopolitical scenario and the risk appetite trends for near-term direction. Further out, the improvement in the pair’s outlook appears underpinned by fresh speculation of a potential interest rate hike by the ECB at some point by year end, higher German yields, persevering elevated inflation and a decent pace of the economic activity and other key fundamentals in the region
Key events in the euro area this week: EMU Current Account, Consumer Confidence (Friday).
Eminent issues on the back boiler: Asymmetric economic recovery post-pandemic in the euro area. Speculation of ECB tightening/tapering later in the year. Presidential elections in France in April. Geopolitical concerns from the Russia-Ukraine conflict.
EUR/USD levels to watch
So far, spot is gaining 0.09% at 1.1368 and faces the next up barrier at 1.1395 (weekly high Feb.16) followed by 1.1491 (200-week SMA) and finally 1.1494 (2022 high Feb.10). On the other hand, a drop below 1.1323 (low Feb.17) would target 1.1279 (weekly low Feb.14) en route to 1.1186 (monthly low Nov.24 2021).
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