EUR/USD appears bid and looks to consolidate the breakout of 1.0600

• EUR/USD adds to Wednesday’s recovery above the 1.0600 level.
• The dollar looks indecisive as traders assess the FOMC Minutes.
•  Investors will closely follow the ADP report and weekly Claims.

The single currency extends the recovery and lifts EUR/USD further north of the 1.0600 barrier on Thursday.

EUR/USD remains supported near 1.0520

EUR/USD advances for the second day in a row on Thursday and once again extend the march north past the 1.0600 barrier amidst the inconclusive session around the dollar.

In fact, the greenback treads water around Wednesday’s closing levels while market participants continue to gauge the somewhat hawkish message from the FOMC Minutes released late on Wednesday, where the Committee appeared leaning towards a more restrictive stance when it comes to monetary policy,

The daily uptick in the pair comes in line with a so far small bounce in the German 10-year Bund yields after three consecutive daily retracements.

In the euro docket, Germany’s trade surplus widened to €10.8B in November (from €6.9B) and the Construction PMI improved marginally to 41.7 in December. Later in the session, Producer Prices in the broader Euroland are due along with flash inflation figures in Italy.

Across the pond, usual Initial Jobless Claims are due along with the ADP Employment Change, Balance of Trade, final Services PMI and speeches by FOMC’s Bostic and Bullard.

What to look for around EUR

EUR/USD seems to have met some decent contention around 1.0520 so far this week and manages to reclaim the area beyond 1.0600 the figure.

In the meantime, the European currency is expected to closely follow dollar dynamics, the impact of the energy crisis on the region and the Fed-ECB divergence.

Back to the euro area, the increasing speculation of a potential recession in the bloc emerges as an important domestic headwind facing the euro in the short-term horizon.

Key events in the euro area this week: Germany Balance of Trade, Germany S&P Global Construction PMI, Italy Flash Inflation Rate (Thursday) – Germany Retail Sales, EMU Flash Inflation Rate, EMU Retail Sales.

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

EUR/USD levels to watch

So far, the pair is gaining 0.14% at 1.0616 and is expected to meet the next up barrier at 1.0713 (weekly high December 30) ahead of 1.0736 (monthly high December 15) and finally 1.0773 (monthly high June 27). On the other hand, the breach of 1.0519 (weekly low January 3) would target 1.0443 (weekly low December 7) en route to 1.0314 (200-day SMA).