EUR/USD regains some traction near 1.1370, focus on data, Lagarde

• EUR/USD bounces off recent lows near 1.350 on Tuesday.
• Flash EMU Q3 GDP next of note in the euro calendar.
• US Retail Sales grabs all the attention later in the NA session.

The single currency attempts a mild rebound vs. its American peer and manages to lift EUR/USD to the 1.1380/85 band on turnaround Tuesday.

EUR/USD looks to data here and there

EUR/USD regains the smile and advances marginally following four consecutive daily pullbacks on Tuesday. Indeed, spot shed far more than 2 cents since the monthly tops around 1.1616 (November 4) to Monday’s new 2021 lows near 1.1350.

The sharp selloff witnessed at the beginning of the week followed the resumption of the strength in the dollar along with dovish comments from ECB’s C.Lagarde, who suggested that tightening the monetary conditions now would no more harm than good.

The move higher in the buck came in tandem with the recovery in US yields as well as tireless concerns surrounding the elevated inflation. In Europe, yields of the key 10y German Bund add to Monday’s advance and approach the -0.22% level.

In the docket, another revision of Q3 GDP figures in the broader euro area is due next ahead of another interview to Chairwoman Lagarde.

Across the pond, October’s Retail Sales will be in the limelight seconded by Industrial Production and speeches from FOMC’s Bostic, Harker, Daly and Barkin.

What to look for around EUR

EUR/USD recorded new lows near 1.1350 on Monday amidst the persistent deterioration in the pair. As usual, the pair’s price action is predicted to mainly track the dynamics around the dollar, while bouts of intermittent strength expected to come from the improvement in the risk complex. On the more macro view, the loss of momentum in the economic recovery in the region - as per some weakness observed in key fundamentals – coupled with rising cases of COVID-19 is also seen pouring cold water over investors’ optimism. Further out, the euro should remain under scrutiny amidst the implicit debate between investors’ speculations of a probable lift-off sooner than anticipated and the ECB’s so far steady hand, all amidst the tenacious elevated inflation in the bloc and increasing conviction that it could last longer than previously anticipated.

Key events in the euro area this week: EMU Flash Q3 GDP, ECB Lagarde (Tuesday) – EMU Final CPI, ECB Lagarde (Wednesday) – ECB Lagarde (Friday).

Eminent issues on the back boiler: Asymmetric economic recovery post-pandemic in the region. Sustainability of the pick-up in inflation figures. Pick-up in the political effervescence around the EU Recovery Fund in light of the rising conflict between the EU, Poland and Hungary on the rule of law. ECB tapering speculations.

EUR/USD levels to watch

So far, spot is up 0.05% at 1.1373 and faces the next up barrier at 1.1558 (20-day SMA) followed by 1.1609 (weekly high November 9) and finally 1.1616 (monthly high Nov.4). On the other hand, a break below 1.1356 (2021 low Nov.15) would target 1.1185 (monthly low Jul.1 2020) en route to 1.1168 (low Jun.19 2020).