EUR/USD treads water around 0.9770, dollar remains bid

• EUR/USD meets resistance in the 0.9800 region on Friday.
• The dollar advances markedly above the 113.00 mark tracked by the DXY.
• The EMU flash Consumer Confidence will be on tap later.

The single currency comes under pressure and drags EUR/USD to the 0.9760 region at the end of the week.

EUR/USD weaker on USD-buying, high yields

EUR/USD now seems to stabilize in the lower end of the recent range in the 0.9770/60 band against the backdrop of further buying interest surrounding the greenback. The move higher in the buck, in the meantime, appears propped up by the unabated climb in US yields.

In the same line, but in the German money market, the 10-year bund yields climb to the vicinity of the 2.50% region for the first time since July 2011.

In the domestic calendar, the advanced Consumer Confidence gauge tracked by the European Commission will be the sole release later in the evening. In the US calendar, NY Fed J.Williams is due to speak ahead of the publication of the Monthly Budget Statement.

What to look for around EUR

EUR/USD now seems to have embarked on some consolidation in the sub-0.9800 area amidst the persistent advance in the dollar.

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: European Council Meeting, EMU Flash Consumer Confidence (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 retreating 0.05% at 0.9776 and the breakdown of 0.9631 (monthly low October 13) would target 0.9535 (2022 low September 28) en route to 0.9411 (weekly low June 17 2002). On the flip side, the next up barrier comes at 0.9875 (weekly high October 18) followed by 0.9999 (monthly high October 4) and finally 1.0050 (weekly high September 20).