EURUSD: Bulls remain in charge above 1.0400 ahead of Lagarde, US data

• EURUSD keeps the bid tone unchanged and surpasses 1.0400.
• ECB’s C.Lagarde is due to speak later in the European evening.
• US Retail Sales, Industrial Production will take centre stage on Wednesday.

The European currency keeps smiling and now lifts EURUSD back above the key 1.0400 barrier on Wednesday.

EURUSD bid ahead of ECB, US key results

EURUSD maintains the optimism well and sound on Wednesday and reclaims the area beyond 1.0400 the figure and flirts at the same time with the critical 200-day SMA once again.

The second uptick in a row in the pair comes in tandem with the unabated weakness surrounding the dollar and further consolidation in the German 10-year bund yields, always above the key 2.0% hurdle.

Absent significant results in the euro calendar, the focus of attention in the region will be on the speech by ECB’s Chairwoman C.Lagarde.

Across the Atlantic, busy day in the US docket will see usual MBA Mortgage Applications in the first turn seconded by Retail Sales, Industrial Production, the NAHB Index, TIC Flows and Business Inventories, all along with speeches by FOMC’s Williams, Waller and Barr.

What to look for around EUR

EURUSD keeps the uptrend intact and manages to return to the area north of the 1.0400 barrier on sustained selling pressure around 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. In addition, markets repricing of a potential pivot in the Fed’s policy has become the exclusive source of the sharp advance in the pair in recent sessions.

Back to the euro area, 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 – emerges as the main headwinds facing the euro in the short-term horizon.

Key events in the euro area this week: ECB Financial Stability Review, ECB C.Lagarde (Wednesday) - Final EMU Inflation Rate (Thursday) - ECB C.Lagarde (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.

EURUSD levels to watch

So far, the pair is gaining 0.58% at 1.0407 and faces the next up barrier at 1.0481 (monthly high November 15) seconded by 1.0500 (round level) and finally 1.0614 (weekly high June 27). On the other hand, a breach of 1.0025 (100-day SMA) would target 0.9918 (low November 10) en route to 0.9730 (monthly low November 3).