Categories: Markets

EUR/USD hits 2-month highs near 1.0940 ahead of ECB and data

EUR/USD hits 2-month highs near 1.0940 ahead of ECB and data
  • EUR/USD extends Monday’s gains and breaks above the 1.0900 level.
  • The dollar continues Monday’s downtrend.
  • The ECB survey and eurozone producer prices stand out on today’s economic calendar.

Optimism around the common currency and the risk complex in general looks strong and lifts the EUR/USD to multi-week highs around 1.0940 during the European session on Tuesday.

EUR/USD rises on the weakness of the dollar, attentive to the data

EUR/USD advances for the second session in a row and reaches the key resistance zone around 1.0930, extending Monday’s bounce from levels below 1.0800.

the persistent sales bias around the dollar continues to drive the marked uptrend of the pair, which seems to have found some additional strength with the recent hawkish tone of some ECB spokespersons, as well as the likelihood that the Fed could go into pause mode in May.

Earlier in the day it was reported that the Germany’s trade surplus was 16 billion euros in February. Eurozone producer prices will be released later in the session, followed by the ECB survey of consumer expectations.

On the other side of the Atlantic will be February factory orders, the IBD/TIPP economic optimism index, JOLT job offers and L. Cook’s FOMC speech.

What can we expect around the EUR?

He EUR/USD recovers above the key 1.0900 level and looks set to challenge the 2023 highs in the 1.1030/35 regionalways amid persistent weakness surrounding the US dollar.

Meanwhile, the price action around the EUR/USD should continue to closely monitor dollar dynamics as well as the emerging divergence between the Fed and the ECB regarding the intentions of central banks regarding the possible next movements of interest rates.

Looking ahead, the ECB’s hawkish discourse continues to favor further rate hikes, although this view appears to be in contrast to some loss of momentum in the region’s economic fundamentals.

EUR/USD levels

At time of writing, the EUR/USD pair is gaining 0.23% on the day, trading at 1.0920. A break above 1.0938 (4 Apr high) would target 1.1032 (2 Feb high) on the way to 1.1100 (round level). On the opposite side, the next support lies at 1.0741 (55-day SMA), followed by 1.0712 (March 24 low) and 1.0661 (100-day SMA).

Source: Fx Street