EUR/USD advances to 3-week tops past 1.0800, looks at ZEW data, US CPI

• EUR/USD finally pierces the key 1.0800 hurdle.
• Germany, EMU Economic Sentiment comes next in the docket.
• US CPI results are due later in the NA session.

The single currency extends the auspicious start of the new trading week and lifts EUR/USD to fresh 3-week highs past 1.0800 the figure on Tuesday.

EUR/USD focused on domestic data, US CPI

EUR/USD trades with gains for the second session in a row amidst the broad-based optimism in the risk complex and the renewed weakness hitting the buck ahead of the release of US inflation figures tracked by the CPI later in the NA session.

Spot gathers extra steam as investors seem to anticipate another soft US CPI print, which should bolster a Federal Reserve pause at its event on Wednesday vs. the largely telegraphed quarter-point increase of the interest rate by the European Central Bank (ECB) on Thursday.

In the euro docket, Economic Sentiment in both Germany and the broader Euroland are due next seconded by Germany’s Current Account.

What to look for around EUR

EUR/USD manages to surpass the key 1.0800 barrier on the back of the persistent selling bias in the US dollar.

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.

Key events in the euro area this week: Germany Final Inflation Rate, Economic Sentiment, EMU Economic Sentiment (Tuesday) – EMU Industrial Production (Wednesday) – Eurogroup Meeting, EMU Balance of Trade, ECB Interest Rate Decision, ECB Lagarde (Thursday) – ECOFIN Meeting, Final EMU Inflation Rate (Friday).

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 gaining 0.39% at 1.0798 and the surpass of 1.0807 (monthly high June 13) would target 1.0878 (55-day SMA) en route to 1.0904 (weekly high May 16). On the other hand, 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).