EUR/USD Bounces Off Lows And Retargets 1.0800 Ahead Of Lagarde

On Wednesday, the single currency regained some poise and lifted EUR/USD to the 1.0790 region.

EUR/USD Focuses On Lagarde, Data, Debt Ceiling

EUR/USD regains some upside traction following Tuesday’s marked pullback and attempts to leave behind the area of recent monthly lows of around 1.0760 on Wednesday.

In the meantime, the tepid recovery attempt in the pair comes along an improvement in the risk-associated universe despite US debt talks now seeming to have entered a pause until the next week, according to the latest news.

No reaction in the FX universe from the lower-than-expected Business Climate tracked by the IFO institute in Germany. Indeed, the survey dropped to 91.7 in May, while Current Conditions receded to 88.6 (from 94.8), and Expectations improved to 94.8 (from 92.2).

Data-wise, in the US, usual weekly MBA Mortgage Applications are due seconded by the publication of the FOMC Minutes of the May event.

What To Look For Around EUR

EUR/USD attempts another move to retake the 1.0800 hurdles and beyond on Wednesday.

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.

Key events in the euro area this week: Germany IFO Business Climate (Wednesday) – Germany Final Q1 GDP Growth Rate, GfK Consumer Confidence (Thursday) – Italy, France Consumer Confidence (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle in June and July (and September?). 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 gaining 0.11% at 1.0780, and a break above 1.0876 (55-day SMA) would target 1.1000 (round level) en route to 1.1095 (2023 high April 26). On the other hand, immediate contention aligns at 1.0759 (monthly low May 19), seconded by 1.0712 (low March 24) and finally 1.0516 (low March 15).

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