EUR/USD regains composure and reclaims the 1.0480 region

• EUR/USD leaves behind the recent weakness and revisits the 1.0480 region.
• Germany’s Industrial Production contracted 0.1% MoM in October.
• EMU Flash GDP Growth Rate surprised to the upside in Q3.

The European currency regains the smile and pushes EUR/USD back to the 1.0480/85 band on Wednesday.

EUR/USD appears supported near 1.0440

EUR/USD manages to regain some upside traction following two consecutive daily retracements amidst alternating risk appetite trends and a so far inconclusive price action around the dollar.

In the German money markets, the 10-year bund yields extend the side-lined theme around the 1.80% region, while their American peers show the same range bound performance.

In addition, the single currency is deriving extra support from auspicious results from the euro calendar, where the GDP Growth Rate in the broader Euroland is now seen expanding 0.3% QoQ and 2.3% YoY in Q3.

Data wise in the US, weekly Mortgage Applications are due along with Consumer Credit Change results.

What to look for around EUR

EUR/USD seems to have bottomed out in the 1.0440 region so far and now intends to reclaim the 1.0500 mark and above amidst a tepid rebound and a directionless dollar.

In the meantime, the European currency is expected to closely follow dollar dynamics, the impact of the energy crisis on the region and the Fed-ECB divergence. In addition, markets repricing of a potential pivot in the Fed’s policy remains the exclusive driver of the pair’s price action for the time being.

Back to the euro area, the increasing speculation of a potential recession in the bloc emerges as an important domestic headwind facing the euro in the short-term horizon.

Key events in the euro area this week: EMU Flash Q3 GDP Growth Rate (Wednesday) – ECB Lagarde (Thursday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle vs. increasing recession risks. Impact of the war in Ukraine and the protracted energy crisis on the region’s growth prospects and inflation outlook. Risks of inflation becoming entrenched.

EUR/USD levels to watch

So far, the pair is gaining 0.13% at 1.0475 and is expected to meet the next up barrier at 1.0584 (monthly high December 5) ahead of 1.0614 (weekly high June 27) and finally 1.0773 (monthly high June 27). On the other hand, the breach of 1.0355 (200-day SMA) would target 1.0330 (weekly low November 28) en route to 1.0222 (weekly low November 21).