EUR/USD meets some resistance around 2023 highs near 1.0930

• EUR/USD deflates a tad after hitting a new yearly high near 1.0930.
• Consumer Confidence in Italy disappointed expectations in January.
• US advanced Q4 GDP, Durable Goods Orders next of note in the NA session.

The European currency now gives aways some gains after motivating EUR/USD to climb to fresh 2023 peaks near 1.0930 earlier in the session on Thursday.

EUR/USD looks to US docket, risk trend

Despite the current knee-jerk, the yearly rally in EUR/USD remains well in place and looks to extend further the recent breakout of the 1.0900 barrier, always on the back of persistent cautiousness among investors ahead of the upcoming FOMC and ECB interest rate decisions.

Other than the intense weakness hurting the greenback, hawkish comments from ECB’s rate-setters and so far sustained improvement in some key fundamentals in the region have been also lending legs to the pair’s strong upside momentum.

In the domestic calendar, Consumer Confidence in Italy eased against consensus to 100.9 in January, while Business Confidence improved to 102.7 in the same period.

Across the pond, the flash Q4 GDP Growth Rate will take centre stage seconded by Durable Goods Orders, Initial Claims, New Home Sales, Trade Balance and the Chicago Fed National Activity Index.

What to look for around EUR

EUR/USD extends further the upside momentum and clinches fresh YTD tops near 1.0930 on Thursday.

In the meantime, price action around the European currency should continue to closely follow dollar dynamics, as well as the potential next steps from the ECB and the Federal Reserve at their upcoming gatherings in the next week.

Back to the euro area, recession concerns now appear to have dwindled, which at the same time remain an important driver sustaining the ongoing recovery in the single currency as well as the hawkish narrative from the ECB.

Key events in the euro area this week: Italy Consumer/Business Confidence (Thursday) – France Consumer Confidence, ECB Lagarde (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle amidst dwindling bets for a recession in the region and still elevated inflation. 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 retreating 0.10% at 1.0901 and the breakdown of 1.0766 (weekly low January 17) would target 1.0589 (55-day SMA) en route to 1.0481 (monthly low January 6). On the other hand, the next up barrier is seen at 1.0929 (2023 high January 26) followed by 1.0936 (weekly high April 21 2022) and finally 1.1000 (round level).