EUR/USD remains firm and climbs to 3-day highs near 1.0620

• EUR/USD advances further north of the 1.0600 barrier.
• The dollar gives away part of the initial bullish attempt.
• Flash inflation figures in France and Spain surprised to the upside.

The single currency extends the auspicious start of the week and lifts EUR/USD to the 1.0620 region, or 3-session tops, on turnaround Tuesday.

EUR/USD picks up pace on higher CPIs

EUR/USD advances for the second session in a row and looks to extend the recent breakout of the key 1.0600 barrier amidst the generalized flattish performance of the global markets on Tuesday.

Some extra support for the single currency also comes after advanced inflation figures in both France and Spain surprised to the upside for the month of February, suggesting that the battle to tame inflation in the euro area could extend further than initially estimated.

Earlier in the session Import Prices in Germany contracted at a monthly 1.2% in January and rose 6.6% over the last twelve months.

In the US, all the attention will be on the release of the Conference Board’s Consumer Confidence gauge seconded by the FHFA’s House Price Index, preliminary trade balance results and manufacturing gauges tracked by the Chicago Fed and the Dallas Fed.

What to look for around EUR

Price action around EUR/USD remains somewhat flat in line with the rest of the global markets, although the pair manages well to reclaim the area beyond 1.0600 the figure so far on Tuesday.

In the meantime, price action around the European currency should continue to closely follow dollar dynamics, as well as the potential next moves from the ECB after the bank has already anticipated another 50 bps rate raise at the March event.

Back to the euro area, recession concerns now appear to have dwindled, which at the same time remain an important driver sustaining the ongoing recovery in the single currency as well as the hawkish narrative from the ECB.

Key events in the euro area this week: France Flash Inflation Rate (Tuesday) – Germany/EMU Final Manufacturing PMI, Germany Unemployment Change, Flash Inflation Rate (Wednesday) – EMU Flash Inflation Rate, Unemployment Rate, ECB Accounts (Thursday) – Germany Balance of Trade, Final Services PMI, EMU Final Services PMI (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle amidst dwindling bets for a recession in the region and still elevated inflation. Impact of the Russia-Ukraine war on the growth prospects and inflation outlook in the region. Risks of inflation becoming entrenched.

EUR/USD levels to watch

So far, the pair is gaining 0.02% at 1.0610 and a breakout of 1.0715 (55-day SMA) would target 1.0804 (weekly high February 14) en route to 1.1032 (2023 high February 2). On the flip side, the next support aligns at 1.0532 (monthly low February 27) seconded by 1.0481 (2023 low January 6) and finally 1.0328 (200-day SMA).