Market news

25 January 2023

EUR/USD recedes from daily highs past 1.0900 ahead of key data

  • EUR/USD probes once again the area above 1.0900.
  • The dollar kept the erratic performance for yet another session.
  • Germany’s Business Climate takes centre stage later in the docket.

The single currency alternates gains with losses vs. the greenback and motivates EUR/USD to keep the trade in the upper end of the recent range near 1.0900 the figure.

EUR/USD now looks at domestic data

EUR/USD keeps the gradual uptrend well in place and manages to revisit the area beyond the 1.0900 barrier on Wednesday, where some decent resistance appears to have emerged so far.

The unabated, albeit slow paced, upside momentum in spot comes on the back of the equally slow downtrend in the greenback, which keeps the price action in the USD Index (DXY) depressed in the 102.00 area.

The ongoing upside in EUR/USD has been propped up by the hawkish rhetoric from ECB’s rate setters, who continue advocate for a 50 bps rate hike at both the February and March gatherings.

In the domestic calendar, all the attention will be on the release of the Business Climate in Germany for the current month measured by the Ifo institute. Across the Atlantic, the sole publication will come from the MBA weekly Mortgage Applications.

What to look for around EUR

EUR/USD flirts once again with the 1.0900 neighbourhood following recent 9-month peaks (January 23).

In the meantime, price action around the European currency should continue to closely follow dollar dynamics, as well as the potential next steps from the ECB and the Federal Reserve.

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.

Key events in the euro area this week: Germany Ifo Business Climate (Wednesday) – Italy Business Confidence (Thursday) – France Consumer Confidence, ECB Lagarde (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle amidst dwindling bets for a recession in the region and still elevated inflation. Impact of the war in Ukraine and the protracted energy crisis on the bloc’s growth prospects and inflation outlook. Risks of inflation becoming entrenched.

EUR/USD levels to watch

So far, the pair is gaining 0.03% at 1.0886 and faces the next up barrier at 1.0926 (2023 high January 23) followed by 1.0936 (weekly high April 21 2022) and finally 1.1000 (round level). On the flip side, the breakdown of 1.0766 (weekly low January 17) would target 1.0576 (55-day SMA) en route to 1.0481 (monthly low January 6).

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Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

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