EUR/USD accelerates losses and drops to the 1.0920 region

• EUR/USD prints monthly lows in the 1.0925/20 band.
• The US Dollar extends the weekly recovery to multi-day highs.
• Markets’ attention will be on US Producer Prices, weekly claims.

The selling pressure around the European currency gathers further steam and drags EUR/USD to 3-week lows near 1.0920 on Thursday.

EUR/USD weakens amidst USD-buying

EUR/USD resumes the weekly leg lower and approaches the 1.0920 region on the back of the continuation of the bid bias around the greenback, which motivates the USD Index (DXY) to creep towards the 102.00 neighbourhood.

In the meantime, recent hawkish comments from ECB’s rate setters failed to lend sustained legs to the pair, which has so far met a tough up-barrier near the 1.1100 mark.

Still around the ECB, Board member M. Kazaks suggested on Wednesday that a rate hike in July might not be the last one amidst the current context of still elevated inflation, an idea that falls in line with speculation of another quarter-point hike in September, which should bring the deposit rate to 4.0%.

There are no scheduled releases in the euro calendar on Thursday, leaving all the attention to the publication of Producer Prices and the usual weekly Initial Jobless Claims across the ocean.

What to look for around EUR

EUR/USD faces renewed downside pressure in response to the resurgence of the risk aversion and the consequent investors’ move towards the greenback.

The movement of the euro's value is expected to closely mirror the behaviour of the US Dollar and will likely be impacted by any differences in approach between the Fed and the ECB with regards to their plans for adjusting 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.

Key events in the euro area this week: ECB De Guindos, Schnabel (Thursday).

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 losing 0.64% at 1.0921 and faces the next contention level at 1.0909 (weekly low April 17) seconded by 1.0831 (monthly low April 10) and finally 1.0795 (100-day SMA). On the flip side, the surpass of 1.1095 (2023 high April 26) would target 1.1100 (round level) en route to 1.1184 (weekly high March 21 2022).