EUR/USD: Rebound meets resistance near 0.9870

• The upside momentum in EUR/USD falters near 0.9870.
• The dollar regains some composure despite lower US yields.
• EMU, Germany ZEW Economic Sentiment next on tap.

The European currency now comes under some selling pressure and motivates EUR/USD to recede from the area of daily highs near 0.9870.

EUR/USD focuses on data, USD-dynamics

EUR/USD looks to extend an auspicious start of the week against the backdrop of the inconclusive price action around the greenback, all within a context of persevering appetite for the riskier assets.

Price action around spot, in the meantime, is accompanied by an uptick in the German 10-year bund yields, always amidst the broader consolidation above the 2.30% level.

In the domestic calendar, the focus of attention will be on the Economic Sentiment in both Germany and the broader Euroland tracked by the ZEW institute for the current month. Across the pond, Industrial Production and the NAHB index are due along with the speech by FOMC’s N.Kashkari.

What to look for around EUR

EUR/USD remains in recovery-mode and now set sails to the 0.9900 neighbourhood amidst faltering price action surrounding the dollar.

In the meantime, price action around the European currency is expected to closely follow dollar dynamics, geopolitical concerns and the Fed-ECB divergence. Following latest results from key economic indicators, the latter is expected to extend further amidst the ongoing resilience of the US economy.

Furthermore, the 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 – adds to the sour sentiment around the euro

Key events in the euro area this week: EMU, Germany ZEW Economic Sentiment (Tuesday) – EMU Final Inflation Rate, European Council Meeting (Thursday) - European Council Meeting, EMU Flash Consumer Confidence (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle vs. increasing recession risks. 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 gaining 0.10% at 0.9846 and expects the next resistance at 0.9873 (weekly high October 18) followed by 0.9999 (monthly high October 4) and finally 1.0050 (weekly high September 20). On the other hand, a breach of 0.9631 (monthly low October 13) would target 0.9535 (2022 low September 28) en route to 0.9411 (weekly low June 17 2002).