EUR/USD: Bulls push for another test of 1.0300

The buying pressure around the European currency remains well and sound and now lifts EUR/USD to 2-day highs above 1.0220 on Tuesday.

EUR/USD bid on USD-selling

EUR/USD advances for the second session in a row and extends the optimism seen at the beginning of the week, as the greenback continues to give away its post-NFP gains on Tuesday.

The pair’s recovery, however, stays so far within the broader 1.0100-1.0300 consolidative range that has been in place since mid-July, always against the backdrop of recession talk on both sides of the Atlantic as well as speculations over the next steps regarding an interest rate hike by both the Fed and the ECB.

Nothing scheduled data wise in Euroland on Tuesday, whereas minor releases are expected across the pond, namely, the NFIB Business Optimism Index and the IBD/TIPP Economic Optimism Index.

What to look for around EUR

EUR/USD so far keeps the 1.0100-1.0300 range unchanged against the backdrop alternating risk appetite trends.

Price action around the European currency, in the meantime, is expected to closely follow dollar dynamics, geopolitical concerns, fragmentation worries and the Fed-ECB divergence.

On the negatives for the single currency emerges the so far increasing speculation of a potential recession in the region, which looks propped up by dwindling sentiment gauges and the incipient slowdown in some fundamentals.

Key events in the euro area this week: Germany Final Inflation Rate (Wednesday) – EMU Industrial Production (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle. Italian elections in late September. Fragmentation risks amidst the ECB’s normalization of monetary conditions. Impact of the war in Ukraine on the region’s growth prospects and inflation.

EUR/USD levels to watch

So far, spot is gaining 0.47% at 1.0238 and faces the next up barrier at 1.0293 (monthly high August 2) seconded by 1.0385 (55-day SMA) and finally 1.0615 (weekly high June 27). On the flip side, a break below 1.0096 (weekly low July 26) would target 1.0000 (psychological level) en route to 0.9952 (2022 low July 14).