- EUR/USD adds to the positive start of the week above 1.0800.
- The broad-based upbeat tone in the risk complex underpins the pair.
- US Consumer Confidence will be in the limelight later in the session.
The optimism around the European currency remains well and sound and motivates EUR/USD to advance to 2-day highs around 1.0830 on turnaround Tuesday.
EUR/USD up on risk-on mood, dollar weakness
EUR/USD advances for the second session in a row and regains the monthly uptrend following the weakness seen in the second half of last week.
The persistent improvement in the risk-linked galaxy continues to weigh on the greenback and props up the resumption of the upside bias in the pair. In addition, expectations that the Fed might keep the Fed Funds Target Range (FFTR) unchanged at the May event also keeps the price action around the buck subdued.
In the domestic calendar, Business Confidence in France eased to 104 (from 105) and improved to 104.2 in Italy (from 103), both prints for the month of March.
Across the ocean, the Conference Board’s Consumer Confidence will take centre stage seconded by housing data and preliminary trade balance figures.
What to look for around EUR
EUR/USD manages to extend the weekly recovery further north of 1.0800 the figure amidst persistent selling interest 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 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: France, Italy Business Confidence (Tuesday) – 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 growth prospects and inflation outlook in the region. Risks of inflation becoming entrenched.
EUR/USD levels to watch
So far, the pair is gaining 0.26% at 1.0825 and a break above 1.0929 (monthly high March 23) would target 1.1032 (2023 high February 2) en route to 1.1100 (round level). On the flip side, immediate support emerges at 1.0712 (low March 24) followed by 1.0629 (100-day SMA) and finally 1.0516 (monthly low March 15).