EUR/USD Comes Under Pressure Near 1.0850

The weekly upside bias in EUR/USD appears to have met a tough barrier around the 1.0850 regions.

EUR/USD Looks Offered As Dollar Rebounds

EUR/USD lost momentum following a promising first half of the week and comes under some selling pressure on the back of the bounce in the greenback and the broad-based offered stance in the risk complex.

Indeed, bulls appear to struggle to overcome the mid-1.0800s, while the better tone in the dollar remains underpinned by the mixed performance in US yields and haven demand stemming from banking concerns.

Meanwhile, ECB Board member Kazimir suggested that core inflation could be key in interest rate decisions when he left the door open to further rate hikes, albeit slower.

In the domestic calendar, Consumer Confidence tracked by GfK in Germany improved marginally to -29.5 for April (from -30.6), while Consumer Confidence in France receded to 81 in March (from 82).

Across the pond, MBA Mortgage Applications and Pending Home Sales are due later in the NA session.

What To Look For Around EUR

The weekly recovery in EUR/USD meets initial resistance near 1.0850 against the backdrop of the moderate bounce in the dollar.

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 GfK Consumer Confidence, France Consumer Confidence (Wednesday) – 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 region’s growth prospects and inflation outlook. Risks of inflation becoming entrenched.

EUR/USD Levels To Watch

So far, the pair is retreating 0.10% at 1.0832 and faces the next support at 1.0712 (low March 24), followed by 1.0637 (100-day SMA) and finally 1.0516 (monthly low March 15). On the other hand, a break above 1.0929 (monthly high March 23) would target 1.1032 (2023 high February 2) en route to 1.1100 (ground level).

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