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EUR/USD pushes higher and targets 1.1500 ahead of ECB, key data

  • EUR/USD moves to fresh 2-month highs around 1.1480.
  • The dollar remains under heavy pressure drops to multi-week lows.
  • Germany GDP ECB’s Lagarde next of note in the docket.

The upbeat note around the single currency remains well and sound on Friday and lifts EUR/USD to new 2-month peaks in the 1.1480 region.

EUR/USD looks to data, Lagarde

EUR/USD advances for the fourth session in a row and gradually approaches the key barrier in the 1.1500 neighbourhood at the end of the week.

Indeed, the firm improvement in the risk complex remains underpinned by the acute selloff in the greenback, which has dragged the US Dollar Index (DXY) to levels last seen in early November 2021 in the 94.60 zone.

It is worth recalling that the dollar accelerated the downside in the wake of the release of December’s inflation figures (Wednesday), while US yields seem to be regaining some traction ahead of the opening bell in the old continent.

In the docket, Chairwoman C.Lagarde will speak later in the European afternoon. Data wise, Germany’s Annual GDP figures are due seconded by Trade Balance figures in the broader euro area. Across the pond, Retail Sales will grab all the attention followed by Industrial Production, the flash reading of the Consumer Sentiment and the speech by NY Fed J.Wiliiams.

What to look for around EUR

EUR/USD pops higher and already flirts with the key 1.1500 neighbourhood, or 2-month tops. The acute pullback in the US dollar follows the somewhat “disappointing” US inflation figures during December, although they did not change the view that the Federal Reserve could likely start its tightening cycle as soon as at the March meeting, exacerbating the policy divergence between the ECB vs. the Fed. On another front, the unabated advance of the coronavirus pandemic remains as the exclusive factor to look at when it comes to economic growth prospects and investors’ morale.

Key events in the euro area this week: Germany Full Year GDP Growth 2021, ECB C.Lagarde (Friday).

Eminent issues on the back boiler: Asymmetric economic recovery post-pandemic in the euro area. ECB stance/potential reaction to the persistent elevated inflation in the region. ECB tapering speculation/rate path. Italy elects President of the Republic in late January. Presidential elections in France in April.

EUR/USD levels to watch

So far, spot is gaining 0.21% at 1.1479 and faces the next up barrier at 1.1505 (100-day SMA) followed by 1.1516 (200-week SMA) and finally 1.1692 (monthly high Oct.18 2021). On the other hand, a break below 1.1356 (55-day SMA) would target 1.1272 (2022 low Jan.4) en route to 1.1221 (monthly low Dec.15 2021).

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