EUR/USD comes under pressure near 1.0100 ahead of ECB

The single currency gives away part of the recent robust advance and forces EUR/USD to retreat to the 1.0050 region on Thursday.

EUR/USD looks offered on ECB-day

EUR/USD loses some upside momentum after failing to test/surpass the key 1.0100 barrier earlier in the session on Thursday.

The ongoing knee-jerk in the pair comes on the back of the tepid recovery in the greenback, which manages to regain some poise following the recent sharp sell-off, as the probability that the Fed could slow the pace of its tightening plans emerges as the immediate threat for extra gains in the buck.

It will be a very interesting day ahead for the euro, as the ECB is forecast to raise its policy rate by 75 bps at its meeting later in the session. Extra attention, in the meantime, is expected around the subsequent press conference by Chair Lagarde.

Still in the euro area, earlier results saw Germany’s Consumer Confidence tracked by GfK come at -41.9 for the month of November (from -42.8).

Across the pond, another estimate of the Q3 GDP Growth Rate comes first followed by Durable Goods Orders and weekly Initial Jobless Claims.

What to look for around EUR

EUR/USD’s upside momentum meets an initial hurdle around 1.0100 ahead of the key ECB gathering due later on Thursday.

In the meantime, price action around the European currency is expected to closely follow dollar dynamics, geopolitical concerns and the Fed-ECB divergence. The resurgence of speculation around a potential Fed’s pivot seems to have removed some strength from the latter, however.

Furthermore, the increasing speculation of a potential recession in the region - which looks propped up by dwindling sentiment gauges as well as an incipient slowdown in some fundamentals – adds to the fragile sentiment around the euro in the longer run.

Key events in the euro area this week: Germany GfK Consumer Confidence, Italy Consumer Confidence, ECB Interest Rate Decision, ECB Lagarde (Thursday) – France/Italy/Germany Flash Inflation Rate, Germany Preliminary Q3 GDP Growth Rate, EMU Final Consumer Confidence, Economic Sentiment

Eminent issues on the back boiler: Continuation of the ECB hiking cycle vs. increasing recession risks. Impact of the war in Ukraine and the persistent energy crunch on the region’s growth prospects and inflation outlook.

EUR/USD levels to watch

So far, the pair is retreating 0.31% at 1.0049 and the breakdown of 0.99704 (weekly low October 21) would target 0.9631 (monthly low October 13) en route to 0.9535 (2022 low September 28). On the upside, there is an initial hurdle at 1.0093 (monthly high October 27) followed by 1.0197 (monthly high September 12) and finally 1.0368 (monthly high August 10).