EUR/USD comes under pressure and retreats below 1.0900 ahead of data, ECB

The weekly uptrend in EUR/USD appears to have met a solid barrier around the monthly highs near 1.0930 on Friday.

EUR/USD looks at data, Lagarde

EUR/USD gives away some ground after four consecutive daily advances at the end of the week on the back of disappointing results from the German docket in combination with renewed buying interest in the greenback.

In the meantime, expectations for further rate hikes by the ECB as soon as at the May event continue to lend support to the upside momentum in the pair, particularly vs. rising speculation that the Federal Reserve might decide to keep rates on hold at its next gathering.

In the domestic calendar, Retail Sales in Germany contracted 7.1% in the year to February, while the March jobs report showed the Unemployment Change increased by 16K persons and the Unemployment Rate ticked higher to 5.6%. Later in the session, flash inflation figures in the euro area will take centre stage ahead of the speech by ECB Chairwoman C. Lagarde.

In the US, all the attention will be on the publication of the inflation measured by the PCE along with Personal Income/Spending and the final Michigan Consumer Sentiment.

What to look for around EUR

The weekly recovery in EUR/USD struggles to surpass the area of the March high around 1.0930.

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: Germany Retail Sales/Labor Market Report, EMU Flash Inflation Rate/Unemployment Rate, France Flash Inflation Rate, Italy Flash Inflation Rate, ECB Lagarde (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 retreating 0.18% at 1.0884 and faces the next contention at 1.0738 (55-day SMA) seconded by 1.0712 (low March 24) and finally 1.0650 (100-day SMA). On the upside, a break above 1.0929 (monthly high March 23) would target 1.1032 (2023 high February 2) en route to 1.1100 (round level).