EUR/USD remains firm and climbs to fresh highs near 1.1080

• EUR/USD advances further and prints new YTD peaks at 1.1075.
• The greenback remains offered and navigates fresh 2023 lows.
• US Retail Sales, Consumer Sentiment take centre stage in the NA session.

Further selling pressure in the greenback pushes EUR/USD to fresh 2023 highs in the vicinity of 1.1080 at the end of the week.

EUR/USD now looks at 1.1100 and above

EUR/USD advances for the fourth session in a row and consolidates further the recent breakout of the psychological 1.1000 hurdle on Friday in a context of persistent weakness hurting the dollar.

The pair’s weekly leg higher has been underpinned by investors’ firmer perception that the Fed might halt its hiking cycle in the near term and most likely following the May gathering, when it is still expected to hike the Fed Funds Target Range (FFTR) by another 25 b

Also propping up the solid momentum in the pair, many ECB rate setters have been advocating for the continuation of the tightening process in the region, putting back on the table a potential 50 bps rate raise next month.

Data wise in the region, final inflation figures in France showed the CPI rose 0.9% MoM in March and 5.7% from a year earlier.

It will be an interesting calendar across the pond, where Retail Sales are due along with Industrial Prodcution, the advanced Michigan Consumer Sentiment and Business Inventories. In addition, FOMC’s C. Waller (permanent voter, centrist) is due to speak.

What to look for around EUR

EUR/USD prints new peaks well north of 1.1000 the figure on the back of the pronounced decline in the greenback and expectations of further tightening by the ECB.

In the meantime, price action around the single currency should continue to closely follow dollar dynamics, as well as the incipient Fed-ECB divergence when it comes to the banks’ intentions regarding the potential next moves in interest rates.

Moving forward, hawkish ECB-speak continue to favour further rate hikes, although this view appears in contrast to some loss of momentum in economic fundamentals in the region.

Eminent issues on the back boiler: Continuation, or not, of the ECB hiking cycle. 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 0.11% at 1.1058 and a break above 1.1075 (2023 high April 14) would target 1.1100 (round level) en route to 1.1184 (weekly high March 21 2022). On the flip side, the next support comes at 1.0788 (monthly low April 3) followed by 1.0754 (55-day SMA) and finally 1.0712 (low March 24).