EUR/USD climbs to 3-week highs past 1.0100

• EUR/USD quickly gathers traction and surpasses 1.0100.
• The greenback accelerates losses amidst prevailing risk-on mood.
• EU Energy Ministers will meet later in the session.

The single currency regains the smile and fresh buying interest and lifts EUR/USD to new 3-week highs past the 1.0100 level at the end of the week.

EUR/USD bolstered by risk appetite

EUR/USD seems to have broken above the recent consolidative phase and advances north of the 1.0100 hurdle on the back of the solid improvement in the risk-linked galaxy on Friday.

Extra upside in the pair also derives fresh oxygen from the intense selling pressure in the greenback, which currently forces the US Dollar Index (DXY) to confront multi-session lows in the 108.40 zone, all following new cycle highs near 110.80 recorded just a couple of sessions ago.

As market participants continue to digest Thursday’s unprecedented interest rate hike by the ECB, Friday’s focus of attention is expected to shift to the EU Energy Ministers emergency meeting amidst the ongoing energy cruch in the region.

Across the pond, the only release will be Wholesale Inventories for the month of July along with speeches by Fed’s Evans, George and Waller.

What to look for around EUR

EUR/USD fully reverses the recent weakness and advances on quite a convincing fashion well north of the parity level to print new multi-week tops following the renewed offered stance in the buck.

So far, price action around the European currency is expected to closely follow dollar dynamics, geopolitical concerns, fragmentation worries and the Fed-ECB divergence.

On the negatives for the single currency emerge the so far increasing speculation of a potential recession in the region, which looks propped up by dwindling sentiment gauges as well as an incipient slowdown in some fundamentals.

Key events in the euro area this week: Eurogroup Meeting, Emergency Energy Meeting (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle. Italian elections in late September. Fragmentation risks amidst the ECB’s normalization of its monetary conditions. Impact of the war in Ukraine and the persistent energy crunch on the region’s growth prospects and inflation outlook.

EUR/USD levels to watch

So far, the pair is advancing 1.09% at 1.0103 and now faces the initial barrier at 1.0153 (55-day SMA) followed by 1.0202 (August 17 high) and then 1.0344 (100-day SMA). On the flip side, the breakdown of 0.9863 (2022 low September 6) would target 0.9859 (December 2002 low) en route to 0.9685 (October 2002 low).