EUR/USD hovers around multi-week lows below 1.0600

Sellers keep the price action around the European currency subdued and prompt EUR/USD to pierce the 1.0600 support to clock new multi-week lows on Thursday.

EUR/USD focuses on USD, data

EUR/USD puts the 1.0600 neighbourhood to the test amidst the continuation of the gradual decline on Thursday, always against the backdrop of the relentless march north in the greenback.

Indeed, the pair navigates an area last traded during the first week of the new year amidst the equally, albeit in the opposite direction, uptick in the greenback to new multi-week highs in the 104.66/70 band.

No news around the pair leaves the ongoing speculation of the Fed’s tighter-for-longer stance as the exclusive driver of the sentiment around the pair for the time being, while expectations of a 50 bps rate hike by the ECB and a 25 bps raise in the Fed Funds Target Range by the Fed, both due in March, appear firm.

In the domestic calendar, final figures of the inflation during January in the broader Euroland will be the salient event on this side of the Atlantic, while another revision of the Q4 GDP Growth Rate, Initial Claims and the Chicago Fed National Activity Index will be in the limelight later in the NA session.

What to look for around EUR

EUR/USD loses further traction and slips back to the sub-1.0600 region, or multi-week lows, 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 after the bank has already anticipated another 50 bps rate raise at the March event.

Back to the euro area, recession concerns now appear to have dwindled, which at the same time remain an important driver sustaining the ongoing recovery in the single currency as well as the hawkish narrative from the ECB.

Key events in the euro area this week: EMU Final Inflation Rate (Thursday) – Germany Final Q4 GDP Growth Rate/GfK Consumer Confidence (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle amidst dwindling bets for a recession in the region and still elevated inflation. 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 0.09% at 1.0594 and a drop below 1.0590 (monthly low February 17) would target 1.0481 (2023 low January 6) en route to 1.0329 (200-day SMA). On the other hand, the next up barrier emerges at 1.0804 (weekly high February 14) seconded by 1.1032 (2023 high February 2) and finally 1.1100 (round level).