EUR/USD resumes the bullish path and targets 1.0900

• EUR/USD rebounds and targets the 1.0900 barrier again.
• Germany’s GDP growth rate contracts in the fourth quarter.
• The US Dallas Fed Index will be released later in the American session.

The common currency begins a new week of operations on the right foot and returns to lead the EUR/USD close to the key 1.0900 barrier at the start of the European session on Monday.

EUR/USD still pending FOMC and ECB events

EUR/USD recovers some of the lost ground and manages to smile again after two consecutive daily reversals, shifting its attention at the same time towards the 1.0900 region amid widespread cautious stance before the key events of this week.

The Federal Open Market Committee (FOMC) meets on Wednesday and a 25 basis point rate hike is expected, while the ECB is expected to increase its interest rate by half a percentage point on Thursday.

In the meantime, investors’ attention should be focused on the possible future moves of these two large central banks, where Investor sentiment remains at the mercy of hawkish messaging from Fed and ECB policymakers, the likelihood of a Fed pivot, improving euro-region growth prospects and resilience of the US economy.

On the eurozone calendar, the Germany’s Gross Domestic Product (GDP) has fallen by 0.2% in the preliminary reading of the fourth quarter of 2022, worsening the 0% estimate and the +0.4% seen in the third quarter. On an annualized basis, GDP has grown by 1.1%, below the previous and forecast 1.3%. The latest data on consumer confidence and economic sentiment in the Eurozone as a whole will be published later.

In the US, the Dallas Fed’s manufacturing index will be the only release on Monday.

What can we expect 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 next meetings this week.

As regards the euro area, recessionary concerns appear to have subsided, although they remain an important factor in the common currency’s recovery, as does the ECB’s hawkish stance.

EUR/USD levels

At time of writing, the EUR/USD pair is up 0.17% on the day, trading at 1.0884. The next resistance is at 1.0929 (26 Jan high), followed by 1.0936 (21 Apr 2022 high) and 1.1000 (round level). Elsewhere, a break of 1.0766 (Jan 17 low) would target 1.0608 (55-day SMA) en route to 1.0481 (Jan 6 low).