EUR/USD extends the recovery to the 1.1060 region ahead of data

EUR/USD adds to Wednesday’s uptick near 1.1060.
EMU Consumer Confidence, Economic Sentiment next on tap.
US Flash Q1 GDP figures take centre stage across the pond.

Pablo Piovano FXStreet

The optimism among market participants remains firm and pushes EUR/USD back to the 1.1060/65 band on Thursday.

EUR/USD now focuses on data, US GDP

EUR/USD so far advances for the second session in a row and maintains the multi-week rally well and sound and with the immediate target now at the 1.1100 round level. It is worth noting that the pair closed with gains in 8 out of the last 9 weeks, having gained more than 5 cents since late February.

In the meantime, hawkish ECB-speak and prospects for extra interest rate hikes following the May gathering continue to underpin the bullish stance in the European currency for the time being.

Later in the euro docket, the final Consumer Confidence gauge is due seconded by Economic and Industrial Sentiment. In the US, advanced Q1 GDP Growth Rate will be in the limelight seconded by usual weekly Initial Claims and Pending Home Sales.

What to look for around EUR

EUR/USD keeps the positive performance and continues to consolidate the recent breakout of the psychological 1.1000 barrier.

Meanwhile, price action around the single currency should continue to closely follow dollar dynamics, as well as the incipient Fed-ECB divergence when it comes to the banks’ intentions regarding the potential next moves in interest rates.

Moving forward, hawkish ECB-speak continue to favour further rate hikes, although this view appears in contrast to some loss of momentum in economic fundamentals in the region.

Key events in the euro area this week: Final Consumer Confidence, Economic Sentiment (Thursday) – Euro group Meeting, Germany labour market report/ Advanced Inflation Rate/Flash Q1 GDP Growth Rate, EMU Flash Q1 GDP Growth Rate (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 gaining 0.06% at 1.1045 and the breakout of 1.1075 (2023 high April 14) would target 1.1100 (round level) en route to 1.1184 (weekly high March 21 2022). On the other hand, the initial support aligns at 1.0909 (weekly low April 17) seconded by 1.0831 (monthly low April 10) and finally 1.0788 (monthly low April 3).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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