EUR/USD: Gains appear limited just below 1.0800

• EUR/USD appears slightly offered near 1.0770.
• Italian Industrial Production comes next on the docket.
• ECB De Guindos si due to speak later in the session.

EUR/USD gives away some gains following Thursday’s strong uptick to the 1.0785/90 band at the end of the week.

EUR/USD focused on USD dynamics

EUR/USD comes under some mild downside pressure after Thursday’s monthly peaks in the area below 1.0800 the figure, as the greenback gives some signs of life amidst a so far tepid recovery.

In the meantime, the pair’s recent advance came in response to the pronounced knee-jerk in the greenback, particularly in response to increasing speculation of an impasse in the Fed’s normalization process at the June 14 gathering.

In stark contrast to the latter, the ECB remains poised to extend the hiking cycle beyond the June event, with investors also pencilling in another quarter-point rate hike in July, while a similar move in September is not ruled out.

In the domestic calendar, Industrial Production in Italy will be the sole release, along with the speech by ECB Vice President L. De Guindos.

What to look for around EUR

EUR/USD trades close to the 1.0800 zone amidst some lacklustre recovery attempt in the greenback.

In the meantime, the pair’s price action 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 continues to favour further rate hikes, although this view appears to be in contrast to some loss of momentum in economic fundamentals in the region.

Eminent issues on the back boiler: Continuation of the ECB hiking cycle in June and July (and September?). 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 0.11% at 1.0770 and faces the next support at 1.0635 (monthly low May 31) seconded by 1.0516 (low March 15) and finally 1.0481 (2023 low January 6). On the upside, the surpass of 1.0787 (monthly high June 8) would target 1.0807 (100-day SMA) en route to 1.0880 (55-day SMA).