EUR/USD extends the weekly rebound and retargets 1.0900

The single currency extends the weekly upside and motivates EUR/USD to keep the trade above the 1.0800 mark on Thursday.

EUR/USD looks at data, dollar

EUR/USD advances uninterruptedly since Monday and continues to consolidate the breakout of the 1.0800 barrier in a context dominated by dollar weakness and further improvement in the risk complex.

In addition, further ECB speak reinforced the case for higher interest rates after Board member Elderson said inflation remains too high and deemed as “robust” the bank’s decision to hike rates at the March event. Elderson also suggested that the ECB will reduce its bond holdings in a balanced manner.

Still around the ECB, the Economic Bulletin sees inflation averaging 5.3% this year, 2.9% in 2024 and 2.1% in 2025. In addition, GDP projections have been revised up in response to lower energy prices and the resilience of the domestic economy.

Data wise in the region, the final Consumer Confidence in the euro area is due later seconded by the Economic Sentiment. In addition, advanced inflation figures in Germany will be in the limelight.

In the US, usual weekly Claims are due along with the final Q4 GDP Growth results.

What to look for around EUR

The weekly recovery in EUR/USD remains unabated and continues to target the 1.0900 neighbourhood so far on Thursday.

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  Flash Inflation Rate, EMU Consumer Confidence, Economic Sentiment (Thursday) – Germany Retail Sales/Labor Market Report, EMU Flash Inflation Rate/Unemployment Rate, France Flash Inflation Rate, Italy Flash Inflation 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 0.14% at 1.0859 and a break above 1.0929 (monthly high March 23) would target 1.1032 (2023 high February 2) en route to 1.1100 (round level). On the flip side, the next support comes at 1.0712 (low March 24) followed by 1.0644 (100-day SMA) and finally 1.0516 (monthly low March 15).