The EUR/USD reduces intraday gains around 1.07 while rebounding from an immediate resistance line. In doing so, the major currency pair reverses the previous day’s pullback from the monthly high during Thursday’s Asian session.
In spite of the pair’s recent upside inclination, the broader outlook for the single currency remains in the negative territory for the time being. As usual, price action in spot should reflect dollar dynamics, geopolitical concerns, and the Fed-ECB divergence.
There are irregular pockets of strength in the single currency, however, should appear strengthened by speculation the ECB could raise rates at some point in the summer, while higher German yields, elevated inflation, and a decent pace of the economic recovery in the region are also supportive of an improvement in the mood around the euro.
Key events in the euro area this week are the Germany Final Q1 GDP, GfK Consumer Confidence, ECB Lagarde (Wednesday). Speculation of the start of the hiking cycle by the ECB as soon as this summer. Asymmetric economic recovery post-pandemic in the euro area and the impact of the war in Ukraine on the region’s growth prospects.
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