EUR/USD gathers steam and retakes 1.0800

• EUR/USD leaves behind the initial pessimism and regains 1.0800.
• The dollar sheds ground following earlier new cycle highs.
• Focus will be on the IMF/World Bank Spring Meetings.

The single currency regains the smile and lifts EUR/USD back to the 1.0800 neighbourhood on Tuesday.

EUR/USD looks to USD, geopolitics

EUR/USD manages to regain some upside traction and flirt once again with the 1.0800 mark following three consecutive daily pullbacks, including a drop to levels last seen nearly 2 years ago near 1.0750 (April 14).

The uptick in spot comes in response to the knee-jerk in the buck after the US Dollar Index (DXY) reached new cycle tops past the 101.00 barrier earlier in the session.

Further legs to the pair’s recovery comes from the German cash market, where the 10y bund yields approach the 0.90% level, an area last traded back in July 2015.

There are no data releases in the domestic calendar, whereas the IMF/World Bank Spring Meetings and Economic Outlook will take centre stage throughout the week. in the US docket, housing data and the speech by Chicago Fed C.Evans are all due later in the NA session.

What to look for around EUR

EUR/USD regains some composure and revisits 1.0800 following last week’s new 2022 lows in the mid-1.0700s following the ECB’s dovish tone. Despite the ongoing bounce, the outlook for the pair remains well into the bearish side for the time being, always in response to dollar dynamics and geopolitical concerns. As usual, occasional 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: IMF World/Bank Spring Meetings (Monday) – EMU Balance of Trade, Industrial Production, IMF World/Bank Spring Meetings (Wednesday) – IMF World/Bank Spring Meetings, Final EMU Inflation Rate, Flash EMU Consumer Confidence (Thursday) – IMF World/Bank Spring Meetings, EMU, Germany Flash Manufacturing, Services PMIs (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. Second round of the presidential elections in France (April 24). Impact on the region’s economic growth prospects of the war in Ukraine.

EUR/USD levels to watch

So far, spot is up 0.22% at 1.0803 and faces the next up barrier at 1.0933 (weekly high April 11) seconded by 1.1000 (round level) and finally 1.1096 (55-day SMA). On the other hand, the break below 1.0757 (2022 low April 14) would target 1.0727 (low April 24 2020) en route to 1.0635 (2020 low March 23).