EUR/USD looks bid near 1.0740 amidst the ongoing consolidation

EUR/USD revisits the 1.0740 area following Thursday's advance.
The greenback attempts a tepid bounce after the recent pullback.
Italy’s Industrial Production, ECB’s Schnabel next on tap.

Pablo Piovano FXStreet

The European currency trades in a vacillating fashion and motivates EUR/USD to hover around the 1.0730/40 band at the end of the week.

EUR/USD remains supported near 1.0670

EUR/USD looks to extend Thursday’s recovery north of 1.0700 the figure on the back of the generalized consolidative mood in the global markets and the lack of direction in the dollar.

In the meantime, the pair remains side-lined in the lower end of the weekly range and appears to have finally digested the steep decline in the wake of the FOMC and ECB gatherings during the previous week.

In the domestic docket, Industrial Production in Italy expanded at a monthly 1.6% in December and 0.1% from a year earlier. Later in the session, Germany will publish the Current Account figures.

In the US, the preliminary Michigan Consumer Sentiment will take centre stage later in the NA session.

What to look for around EUR

EUR/USD seems to have embarked in a consolidative phase following the recent drop to the 1.0670 region, although the resistance line around 1.0800 continues to cap occasional bullish attempts for the time being.

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 central bank delivered a 50 bps at its meeting last week.

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: Italy Industrial Production (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 gaining 0.01% at 1.0741 and is expected to meet the next up barrier at 1.1032 (2023 high February 2) followed by 1.1100 (round level) and finally 1.1184 (weekly high March 31 2022). On the flip side, a drop below 1.0681 (55-day SMA) would target 1.0669 (monthly low February 7) en route to 1.0481 (2023 low January 6).

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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