EUR/USD keeps the bid bias unchanged above 1.0800

• EUR/USD meets initial hurdle near 1.0840 on Thursday.
• ECB Accounts showed members initially favoured a 75 bps rate hike.
• The US Philly Fed Index improved to -8.9 in January.

Bulls remain in control of the sentiment around the single currency, with EUR/USD charting decent gains above the 1.0800 mark as the European session draws to a close on Thursday.

EUR/USD: Weekly performance capped near 1.0890

EUR/USD adds to Wednesday’s small advance and manages well to keep business above 1.0800 the figure so far on Thursday.

Indeed, the selling interest around the greenback allows the continuation of the improvement in the risk complex and helps with the pair’s upside bias, while hawkish ECB-speak also props up the march north in spot.

From the ECB, the Accounts of the latest meeting showed an initial attempt to hike rates by 75 bps and some participants advocated for a quicker reduction of the APP.

In the US calendar, Building Permits contracted 1.6% MoM in December and Housing Starts shrank at a monthly 1.4%. Additionally, Initial Claims went up by 190K in the week to January 14 and the Philly Fed Manufacturing Index improved to -8.9 for the current month.

What to look for around EUR

EUR/USD bounces off recent lows in the 1.0770/65 band and manages to regain the 1.0800 mark and beyond amidst the better mood in the risk-associated universe.

Price action around the European currency should continue to closely follow dollar dynamics, as well as the impact of the energy crisis on the euro bloc and the Fed-ECB divergence.

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: ECB Lagarde, ECB Accounts (Thursday) - ECB Lagarde (Friday).

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

EUR/USD levels to watch

So far, the pair is gaining 0.25% at 1.0821 and faces the next up barrier at 1.0887 (monthly high January 18) followed by 1.0900 (round level) and finally 1.0936 (weekly high April 21 2022). On the flip side, the breakdown of 1.0766 (weekly low January 17) would target 1.0513 (55-day SMA) en route to 1.0481 (monthly low January 6).