The European currency picks up extra impulse and lifts EUR/USD to the area of 3-day highs around 1.0770 on Thursday. EUR/USD now sees some light at the end of the tunnel and manages to set aside five consecutive daily pullbacks, retargeting at the same time the 1.0800 neighbourhood amidst the renewed selling interest hovering around the dollar.
A more positive scenario for the risk-linked galaxy underpins the upside bias in the pair, which, however, still struggles to pick up a more convincing upside traction following last week’s monthly lows near 1.0670.
Additional legs for the euro came after advanced inflation figures in Germany showed a small uptick in the headline CPI for January. Indeed, consumer prices are seen rising 8.7% last month and 1.0% vs. the previous month.
In the US calendar, the usual weekly Initial Claims will take centre stage later in the European afternoon. EUR/USD seems to have embarked on a decent recovery soon after bottoming out in the 1.0670 regions earlier in the week, always in response to the loss of upside traction around 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 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.
So far, the pair is gaining 0.44% at 1.0757 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 1.0674 (55-day SMA) would target 1.0669 (monthly low February 7) en route to 1.0481 (2023 low January 6).