EUR/USD picks up pace above 0.9700 prior to US data

• EUR/USD maintains its consolidation around the 0.9700 region.
• German final CPI matched the preliminary readings for September.
• Markets’ attention will be on US CPI and Initial Claims, both due later.

The single currency attempts a mild rebound and prompts EUR/USD to probe daily highs around 0.9730 on Thursday.

EUR/USD focuses on US inflation

EUR/USD keeps the erratic performance so far this week amidst the equally flatish price action around the greenback, while risk appetite trends also show no clear direction for the time being.

In the meantime, the side-lined move in the pair comes in tandem with another small drop in the German 10-year bund yields following Wednesday’s fresh 11-year peaks past 2.42%.

Earlier in the session, final German inflation figures saw the CPI rise 10.0% YoY and 1.9% MoM in September, matching the preliminary results. Moving forward, all the attention will be on the release of US inflation figures measured by the CPI for the month of September seconded by the usual Initial Jobless Claims.

What to look for around EUR

EUR/USD extends the consolidation around the 0.9700 region ahead of key data releases in the US docket.

In the meantime, price action around the European currency is expected to closely follow dollar dynamics, geopolitical concerns and the Fed-ECB divergence. Following latest results from key economic indicators, the latter is expected to extend further amidst the ongoing resilience of the US economy.

Furthermore, the increasing speculation of a potential recession in the region - which looks propped up by dwindling sentiment gauges as well as an incipient slowdown in some fundamentals – adds to the sour sentiment around the euro

Key events in the euro area this week: Germany Final Inflation Rate (Thursday) – EMU Balance of Trade (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle vs. increasing recession risks. Impact of the war in Ukraine and the persistent energy crunch on the region’s growth prospects and inflation outlook.

EUR/USD levels to watch

So far, the pair is up 0.24% at 0.9725 and faces the next up barrier at 0.9999 (weekly high October 4) followed by 1.0050 (weekly high September 20) and finally 1.0197 (monthly high September 12). On the flip side, a drop below 0.9669 (monthly low October 11) would target 0.9535 (2022 low September 28) en route to 0.9411 (weekly low June 17 2002).