EUR/USD regains upside traction above 1.1300 ahead of EMU CPI, NFP

• EUR/USD leaves behind Thursday’s negative price action.
• The greenback slips back into the negative ground despite higher yields.
• EMU flash CPI, US Nonfarm Payrolls next of note in the calendar.

The single currency regains the smile and lifts EUR/USD back above the key 1.1300 barrier on Friday.

EUR/USD now looks to domestic data, NFP

EUR/USD extends the erratic performance so far this week although always around the key 1.1300 neighbourhood and ahead of the critical release of US Nonfarm Payrolls for the month of December.

The pair has been following the broad risk appetite trends so far this week, although the lack of direction appears to have prevailed at least until the publication of the NFP.

Further out, headlines around the progress of the pandemic and the omicron variant look somewhat relegated to the back seat in favour of dollar dynamics, which have been exacerbated following the sharp climb in US yields and hawkish FOMC Minutes.

In the domestic calendar, advanced inflation figures in the broader Euroland should grab initial attention seconded by Retail Sales and the Economic Sentiment. Across the pond, the publication of the December’s NFP is expected to take centre stage ahead of speeches by FOMC’s Daly, Bostic and Barkin.

What to look for around EUR

EUR/USD met quite decent contention in the 1.1270 zone so far in the first week of the new year. In the meantime, price action around spot continues to track the performance of the greenback as well as the policy divergence between the ECB vs. the Federal Reserve and the response to the persistent elevated inflation on both sides of the Atlantic. On another front, the unabated progress of the coronavirus pandemic remains as the exclusive factor to look at when it comes to the economic growth prospects and investors’ morale.

Key events in the euro area this week: EMU Advanced December Inflation Rate (Friday).

Eminent issues on the back boiler: Asymmetric economic recovery post-pandemic in the euro area. ECB stance/potential reaction to the persistent elevated inflation in the region. ECB tapering speculation/rate path. Presidential elections in France.

EUR/USD levels to watch

So far, spot is up 0.17% at 1.1313 and faces the next up barrier at 1.1386 (monthly high November 30) followed by 1.1464 (weekly high Nov.15) and finally 1.1520 (200-week SMA). On the other hand, a break below 1.1272 (weekly low Jan.4) would target 1.1221 (weekly low Dec.15) en route to 1.1186 (2021 low Nov.24).