EUR/USD bounces off lows, regains 1.0900 and beyond

• EUR/USD now posts decent gains past the 1.0900 barrier.
• German Industrial Production expanded 0.2% MoM in February.
• Weekly Claims, Fedspeak next of note in the US docket.

EUR/USD partially reverses the recent intense selloff and manages to return above the 1.0900 hurdle on Thursday.

EUR/USD supported near 1.0870

EUR/USD regains some composure after five consecutive daily retracements on the back of the renewed selling bias in the greenback.

Indeed, the dollar gives away part of the recent strong advance to fresh cycle tops near 99.80, as investors cash up part of those gains and continue to digest the release of the FOMC Minutes late on Wednesday.

No news from the Minutes, as they leant towards the hawkish side after providing further details on the unwinding of the bond-purchase programme, while they also showed many participants’ preference for a larger rate hike.

In line with Thursday’s performance of cash markets overseas, the German 10y bund yields drift lower following recent tops and they now navigate the 0.62% region.

In the domestic data sphere, Germany Industrial Production expanded at a monthly 0.2% in February. Later in the session EMU Retail Sales are due seconded by the ECB’s Accounts. Across the Atlantic, Initial Claims and Consumer Credit Change will be published while FOMC’s Bullard, Evans, Bostic and Williams are also due to speak.

What to look for around EUR

EUR/USD remains under pressure, although it manages to rebound from the 1.0870 region and retake the 1.0900 hurdle so far. The recent negative performance of the pair came in response to the firmer pace of the greenback and renewed geopolitical concerns. As usual, pockets of strength in the single currency should appear reinforced by speculation the ECB could raise rates before the end of the year, while higher German yields, elevated inflation, the decent pace of the economic recovery and auspicious results from key fundamentals in the region are also supportive of a rebound in the euro.

Key events in the euro area this week: Germany Industrial Production, EMU Retail Sales, ECB Accounts (Thursday) – France Presidential Election (Sunday, April 10).

Eminent issues on the back boiler: Asymmetric economic recovery post-pandemic in the euro area. Speculation of ECB tightening/tapering later in the year. Presidential elections in France in April. Impact of the geopolitical conflict in Ukraine.

EUR/USD levels to watch

So far, spot is up 0.09% at 1.0901 and the next up barrier emerges at 1.1156 (55-day SMA) followed by 1.1184 (weekly high March 31) and finally 1.1226 (100-day SMA). On the flip side, a breakdown of 1.0874 (monthly low April 6) would target 1.0805 (2022 low March 7) en route to 1.0766 (monthly low May 7 2020).