EUR/USD Prints 2-Month Highs Near 1.0940 Ahead Of Data, ECB

The optimism around the European currency – and the risk complex in general – appears well and sound and now lifts EUR/USD to multi-week highs around 1.0940 on Tuesday.

EUR/USD Up On Weaker Dollar, Looks At Data

EUR/USD advances for the second consecutive session and leaves behind the key resistance area around 1.0930, extending further Monday’s rebound from the sub-1.0800 region

The persistent offered bias in the greenback continues to underpin the significant uptrend in the pair, which seems to have met extra legs in the recent hawkish tone from some ECB speakers and the probability that the Fed might enter a pause mode in May.

Germany’s trade surplus in the euro area came to €16B in February. Later in the session will come EMU’s Producer Prices, followed by the ECB Consumer Expectations Survey.

Across the ocean, February’s Factory Orders, the IBD/TIPP Economic Optimism Index, JOLTs Job Openings and the speech by FOMC L. Cook (permanent voter, centrist) are also due.

What To Look For Around EUR

EUR/USD regains the key 1.0900 mark and above and seems ready to challenge the 2023 peaks in the 1.1030.35 band, always amidst the persistent weakness surrounding the dollar.

In the meantime, price action around the single currency should continue to closely follow dollar dynamics and the developing Fed-ECB divergence regarding the banks’ intentions regarding the potential next moves in interest rates.

Moving forward, hawkish ECB-speak continues to favour 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 Balance of Trade, ECB Consumer Expectations Survey, EMU Producer Prices (Tuesday) – Germany, EMU Final Services PMI (Wednesday) – Germany Construction PMI (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 gaining 0.23% at 1.0920, and a break above 1.0938 (monthly high April 4) would target 1.1032 (2023 high February 2) en route to 1.1100 (round level). On the flip side, the next support comes at 1.0741 (55-day SMA), seconded by 1.0712 (low March 24) and finally 1.0661 (100-day SMA).

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