EUR/USD meets resistance in the 1.1000 region ahead of FOMC

• EUR/USD remains bid and close to the 1.1000 area.
• Risk-on mood continues to prop up the pair on Wednesday.
• The FOMC meeting will be the salient event later in the session.

Buying interest keeps the European currency supported for yet another session and lifts EUR/USD to the 1.1000 neighbourhood on Wednesday.

EUR/USD: All the attention remains on the Fed

EUR/USD advances for the third consecutive session, although a convincing breakout above the psychological 1.1000 barrier still remains elusive for euro bulls.

The positive streak around the pair comes hand in hand with a mild improvement in the risk complex following the cautious optimism in the geopolitical area regarding a potential diplomatic solution to the war in Ukraine.

The march north in spot also remains underpinned by the strong rebound in German 10y bund yields, which navigate an area last seen back in November 2018 around 0.40%.

Minor releases in the euro docket saw Italian final CPI rise 0.9% MoM in February and 5.7% over the last twelve months.

Across the pond, all the focus will be on the Fed gathering, while Retail Sales take centre stage in the daily docket followed by MBA Mortgage Applications, Business Inventories and the NAHB Index.

What to look for around EUR

The European currency maintains a bid bias and flirts with the 1.1000 zone once again, always on the back of renewed optimism in the risk-linked universe. Pockets of strength in the euro should appear propped up by speculation of the start of a hiking cycle by the ECB at some point by year end, while higher German yields, elevated inflation, the decent pace of the economic recovery and auspicious results from key fundamentals in the region are also supportive of a firmer currency for the time being.

Key events in the euro area this week: ECB Lagarde, EMU Final CPI (Thursday) – EMU Balance of Trade (Friday).

Eminent issues on the back boiler: Asymmetric economic recovery post-pandemic in the euro area. Speculation of ECB tightening/tapering later in the year. Presidential elections in France in April. Impact of the geopolitical conflict in Ukraine.

EUR/USD levels to watch

So far, spot is gaining 0.39% at 1.0997 and faces the next up barrier at 1.1019 (weekly high Mar 15) followed by 1.1121 (weekly high Mar 10) and finally 1.1255 (55-day SMA). On the other hand, a drop below 1.0900 (weekly low Mar 14) would target 1.0805 (2022 low Mar 7) en route to 1.0766 (monthly low May 7 2020).