EUR/USD: Bulls look for a second chance to surpass 1.0600

• EUR/USD falters just ahead of the 1.0600 mark on Friday.
• German 10y Bund yields approach the 1.00% mark.
• Flash EMU Consumer Confidence next on tap later in the session.

EUR/USD regains some composure and retargets the 1.0600 region following an earlier drop to the mid-1.0500s at the end of the week.

EUR/USD remains focused on 1.0641

EUR/USD comes under some mild selling pressure following Thursday’s sharp rebound. The abrupt move higher was triggered exclusively by another bout of dollar weakness, although a close above the key 1.0600 mark still remains elusive for EUR-bulls.

In the meantime, German 10y Bund yields look to regain the psychological 1.00% mark following two consecutive sessions with losses, while US yields so far trade with marginal gains along the curve.

In the euro docket, the only release of note will be the flash Consumer Confidence gauged by the European Commission for the month of May (-22.0 prev.). There are no scheduled publications or events across the pond on Friday.

What to look for around EUR

The weekly recovery in EUR/USD has so far met strong resistance around 1.0600. Despite the pair removed some downside pressure, the broader outlook for the single currency remains entrenched in the negative territory for the time being. As usual, price action in spot should reflect dollar dynamics, geopolitical concerns and the Fed-ECB divergence. Occasional pockets of strength in the single currency, in the meantime, should appear reinforced by firmer speculation the ECB could raise rates at some point in the summer, while higher German yields, elevated inflation and a decent pace of the economic recovery in the region are also supportive of an improvement in the mood around the euro.

Key events in the euro area this week: EMU Flash Consumer Confidence (Friday).

Eminent issues on the back boiler: Speculation of the start of the hiking cycle by the ECB as soon as this summer. Asymmetric economic recovery post-pandemic in the euro area. Impact of the war in Ukraine on the region’s growth prospects.

EUR/USD levels to watch

So far, spot is losing 0.04% at 1.0577 and a breach of 1.0348 (2022 low May 13) would target 1.0340 (2017 low January 3 2017) en route to 1.0300 (round level). On the upside, the initial hurdle aligns at 1.0607 (weekly high May 19) seconded by 1.0641 (weekly high May 5) and finally 1.0936 (weekly high April 21).