- EUR/USD extends the march higher to near 1.0500.
- The risk rally continues to weigh on the dollar.
- Another revision of EMU Q1 GDP surprises to the upside.
The risk rally remains unabated so far and lifts EUR/USD to fresh 3-day highs in the boundaries of the 1.0500 mark on Tuesday.
EUR/USD now looks to 1.0500 ahead of Lagarde, Powell
EUR/USD prolongs its weekly recovery and adds to the current bounce off Friday’s 2022 lows around 1.0350 against the backdrop of quite a moderate improvement in the risk-associated complex across the board.
Extra gains in the pair comes in line with the recovery in US yields along the curve and another attempt of the German 10y Bund yields to revisit the key 1.00% barrier.
In the docket, further support for the European currency comes after another revision of Q1 EMU GDP now sees the bloc expanding 0.3% inter-quarter and 5.1% from a year earlier. Later in the session, Chairwoman C.Lagarde will speak at an event in Germany.
In the NA session, the focus of attention will be the speech by Chair Powell seconded by US Retail Sales, Industrial Production, Business Inventories and the NAHB Index.
In addition, FOMC’s Bullard, Harker and Mester are all due to speak.
What to look for around EUR
EUR/USD pushes higher and approaches the 1.0500 mark on the back of a persistent risk rally. Despite the pair removing some downside pressure, the broader outlook for the single currency remains entrenched in negative territory for the time being. As usual, price action in spot should reflect dollar dynamics, geopolitical concerns and the Fed-ECB divergence. Occasional pockets of strength in the single currency, in the meantime, should appear reinforced by firmer speculation the ECB could raise rates at some point in the summer, while higher German yields, elevated inflation and a decent pace of the economic recovery in the region are also supportive of an improvement in the mood around the euro.
Key events in the euro area this week: EMU Flash GDP Growth Rate, ECB Lagarde (Tuesday) – EMU Final Inflation Rate (Wednesday) – ECB Monetary Policy Meeting Accounts (Thursday) – Germany Producer Prices, EMU Flash Consumer Confidence (Friday).
Eminent issues on the back boiler: Speculation of the start of the hiking cycle by the ECB as soon as this summer. Asymmetric economic recovery post-pandemic in the euro area. Impact of the war in Ukraine on the region’s growth prospects.
EUR/USD levels to watch
So far, spot is up 0.46% at 1.0478 and faces the next hurdle at 1.0492 (weekly high May 17) seconded by 1.0641 (weekly high May 5) and finally 1.0936 (weekly high April 21). On the other hand, the breach of 1.0348 (2022 low May 13) would target 1.0340 (2017 low January 3 2017) en route to 1.0300 (round level).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD loses ground due to the absence of a hawkish RBA
The Australian Dollar has plunged following the Reserve Bank of Australia's decision to maintain its interest rate at 4.35% on Tuesday. Investors sentiment leaned toward a potentially more hawkish stance from the RBA, particularly after last week's inflation data surpassed expectations.
EUR/USD edges lower to near 1.0750 after hawkish remarks from a Fed official
EUR/USD extends its losses for the second successive session, trading around 1.0750 during the Asian session on Wednesday. The US Dollar gains ground due to the expectations of the Federal Reserve’s prolonging higher interest rates.
Gold price remains on the defensive on a firmer US Dollar
Gold price attracts some sellers on the firmer US Dollar during the Asian trading hours on Wednesday. The hawkish remarks from Federal Reserve officials dampen hopes for potential interest rate cuts in 2024 despite weaker-than-expected US employment reports in April.
FTX files consensus-based plan of reorganization, awaits bankruptcy court approval
FTX has filed a consensus-based plan for its reorganization, coming almost two years after the now defunct FTX filed for Chapter 11 Bankruptcy Protection in the District of Delaware.
Living vicariously through rate cut expectations
U.S. stock indexes made gains on Tuesday as concerns about an overheating U.S. economy ease, particularly with incoming economic reports showing data surprises at their most negative levels since February of last year.