EUR/USD now struggles near 1.1360 post-US data

• EUR/USD fades the earlier advance to the 1.1400 area.
• US Retail Sales came above estimates in January.
• Markets’ attention now shifts to the FOMC Minutes.

Following an early climb to the proximity of 1.1400, EUR/USD now erodes part of that move and returns to the 1.1360 region so far on Wednesday.

EUR/USD capped by 1.1400, looks to FOMC

EUR/USD failed to extend the weekly rebound further north of the 1.1400 mark midweek, as better-than-expected results from the US docket sponsored a noticeable bounce in the buck.

Indeed, US Retail Sales crushed initial estimates after expanding at a monthly 3.8% in January. Core sales followed suit and rose 3.3% MoM. Earlier data showed Mortgage Applications shrinking 5.4% in the week to February 11 according to MBA.

In the meantime, the relief rally keeps sustaining the better mood in the risk complex despite there seems to be no further progress on the (apparent) de-escalation of tensions in the Russia-Ukraine front.

Later in the session, US Industrial Production, Capacity Utilization, Business Inventories and the NAHB Index are all due ahead of the release of the FOMC Minutes of the January event.

What to look for around EUR

EUR/USD now seems to have met decent resistance around the 1.1400 zone amidst some loss of momentum in the relief rally in combination with above-estimated results from the US docket. Looking at the broader scenario, the improvement in the pair’s outlook appears underpinned by fresh speculation of a potential interest rate hike by the ECB at some point by year end, higher German yields, persevering elevated inflation and a decent pace of the economic activity and other key fundamentals in the region.

Key events in the euro area this week: EMU Industrial Production (Wednesday) – Flash EMU Consumer Confidence (Friday).

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. Geopolitical concerns from the Russia-Ukraine conflict.

EUR/USD levels to watch

So far, spot is advancing 0.02% at 1.1360 and faces the next up barrier at 1.1395 (weekly high Feb.16) followed by 1.1491 (200-week SMA) and finally 1.1494 (2022 high Feb.10). On the other hand, a drop below 1.1326 (55-day SMA) would target 1.1279 (weekly low Feb.14) en route to 1.1186 (monthly low Nov.24 2021).