EUR/USD looks bid around 1.1000, focus on Ukraine, Fed

• EUR/USD adds to Monday’s gains around 1.1000.
• Hopes of an end to the military conflict prop up spot.
• Germany/EMU ZEW Survey comes next in the calendar.

The single currency extends the upbeat tone and encourages EUR/USD to surpass once again the key barrier at 1.1000 on Tuesday.

EUR/USD supported by risk appetite

EUR/USD advances for the second session in a row and manages to put further distance from recent lows in the 1.0900 neighbourhood against the backdrop of the relentless improvement in the risk-associated galaxy, which remain in turn underpinned by cautious optimism surrounding the Russia-Ukraine peace talks.

Higher German 10y Bund yields have been also lending legs to the recovery in the pair despite the ongoing knee-jerk on the back of some recovery in the global money markets. It is worth mentioning that the 10y German benchmark yields climbed to levels last seen in December 2018 around 0.38% on Monday.

In the meantime, investors are expected to closely follow further diplomatic negotiations aimed at ending the military dispute as soon as possible, while extra attention should shift to the imminent FOMC gathering on Wednesday.

Data wise in Euroland, the ZEW survey is due and will show the performance of the Economic Sentiment in both Germany and the broader euro area in March. Across the pond, Producer Prices will be in the limelight seconded by TIC Flows.

What to look for around EUR

The European currency manages to reclaim some ground lost and flirt with the 1.1000 zone once again, always on the back of the renewed bid bias in the risk-linked universe. Pockets of strength in the euro should appear propped up by the speculation of the start of the hiking cycle by the ECB at some point by year end, while higher German yields, elevated inflation, the decent pace of the economic recovery and auspicious results from key fundamentals in the region are also supportive of a firmer currency for the time being.

Key events in the euro area this week: EcoFin Meeting, Germany/EMU ZEW Survey (Tuesday) – ECB Lagarde, EMU Final CPI (Thursday) – EMU Balance of Trade (Friday).

Eminent issues on the back boiler: Asymmetric economic recovery post-pandemic in the euro area. Speculation of ECB tightening/tapering later in the year. Presidential elections in France in April. Impact of the geopolitical conflict in Ukraine.

EUR/USD levels to watch

So far, spot is gaining 0.50% at 1.0994 and faces the next up barrier at 1.1121 (weekly high Mar.10) followed by 1.1127 (20-day SMA) and finally 1.1262 (55-day SMA). On the other hand, a drop below 1.0900 (weekly low Mar.14) would target 1.0805 (2022 low Mar.7) en route to 1.0766 (monthly low May 7 2020).