The selling pressure around the European currency gathers further steam and drags EUR/USD to 3-week lows near 1.0920 on Thursday.
EUR/USD Weakens Amidst USD-Buying
EUR/USD resumes the weekly leg lower and approaches the 1.0920 region on the back of the continuation of the bid bias around the greenback, which motivates the USD Index (DXY) to creep toward the 102.00 neighborhood.
In the meantime, recent hawkish comments from ECB’s rate-setters failed to lend sustained legs to the pair, which has so far met a tough up-barrier near the 1.1100 mark.
Still around the ECB, Board member M. Kazaks suggested on Wednesday that a rate hike in July might not be the last one amidst still elevated inflation. This idea aligns with speculation of another quarter-point hike in September, which should bring the deposit rate to 4.0%.
There are no scheduled releases in the euro calendar on Thursday, leaving all the attention to the publication of Producer Prices and the usual weekly Initial Jobless Claims across the ocean.
What To Look For Around EUR
EUR/USD faces renewed downside pressure in response to the resurgence of riskaversion and the consequent investors’ move towards the greenback.
The movement of the euro’s value is expected to mirror the behaviour of the US Dollar closely. It will likely be impacted by any differences in approach between the Fed and the ECB regarding their plans for adjusting interest rates.
Moving forward, hawkish ECB-speak continues to favor further rate hikes, although this view appears in contrast to some loss of momentum in economic fundamentals in the region.
This week’s key events in the euro area: ECB De Guindos, Schnabel (Thursday).
Eminent issues on the back boiler: Continuation (or not) of the ECB hiking cycle. Impact of the Russia-Ukraine War on the region’s growth prospects and inflation outlook. Risks of inflation becoming entrenched.
EUR/USD levels to watch
So far, the pair is losing 0.64% at 1.0921 and faces the next contention level at 1.0909 (weekly low April 17), seconded by 1.0831 (monthly low April 10) and finally 1.0795 (100-day SMA). On the flip side, the surpass of 1.1095 (2023 high April 26) would target 1.1100 (round level) en route to 1.1184 (weekly high March 21, 2022).