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EUR/USD remains offered and approaches 1.0900

  • EUR/USD advances to 2-day highs near 1.0915.
  • Preliminary German GDP figures disappointed in the fourth quarter.
  • Consumer Confidence and EMU Economic Sentiment improved in January.

The optimism around USD stands firm in the European afternoon, with the EUR/USD posting decent gains near the 1.0900 barrier.

EUR/USD: Limited daily gains near 1.0915

EUR/USD is holding firm near the 1.0900 area on the back of a bit of a pullback in the dollar and inconclusive risk appetite trends earlier in the week.

For now, caution dominates investor sentiment ahead of the Fed’s and ECB’s policy meetings on Wednesday and Thursday, respectively.

Earlier in the session, the German economy contracted 0.2% quarter-on-quarter in the fourth quarter and grew 1.1% in the last 12 months, according to preliminary GDP data. In addition, Eurozone Final Consumer Confidence improved to -20.9 in January, while Economic Sentiment also rose to 99.9 in the same period.

The Dallas Fed manufacturing index will be the only release on Monday.

What to watch out for around the EUR

The strong yearly recovery in EUR/USD seems to have hit a decent initial barrier around 1.0930 for now.

Meanwhile, the evolution of the prices of the European currency should closely follow the dynamics of the dollar, as well as the possible measures adopted by the ECB and the Federal Reserve in their upcoming meetings next week.

As regards the euro area, concerns about the recession seem to have subsided, although it remains an important factor for the recovery of the single currency, as well as the ECB’s hawkish stance.

technical levels

For now, the pair is up 0.29% at 1.0896 and faces next resistance at 1.0929 (26 Jan 2023 high), followed by 1.0936 (21 Apr 2022 weekly high) and finally 1.1000 ( round level). Elsewhere, break of 1.0766 (weekly low Jan 17) would target 1.0608 (55-day SMA) en route to 1.0481 (monthly low Jan 6).

Source: Fx Street

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