EUR/USD meets some resistance just above 1.0700

• EUR/USD looks side-lined near 1.0700 on Monday.
• The pair looks to extend the bounce of Friday’s monthly lows.
• Flash EMU Consumer Confidence next of note in the docket.

The single currency clings to the recent bullish move and encourages EUR/USD to return to the 1.0700 neighbourhood at the beginning of the week.

EUR/USD looks to USD, data

EUR/USD alternates gains with losses amidst the equally vacillating mood in the global markets on Monday and attempts to extend the bounce off February lows near 1.0600 the figure recorded on Friday.

So far, it seems cautiousness has started to dominate the markets’ mood ahead of the release of the FOMC Minutes and the Fed’s preferred inflation gauge – the PCE – on Wednesday and Friday, respectively.

The recent pullback in spot, in the meantime, came against the backdrop of further hawkish remarks from Fed’s policy makers vs. some doubts regarding the rate path that emerged amidst ECB’s rate setters past the March gathering.

Absent releases in the US data space, the focus of attention will be on the publication of the advanced Consumer Confidence in the euro bloc tracked by the European Commission (EC).

What to look for around EUR

EUR/USD regains some traction on Monday, although it appears to have met quite a solid hurdle around the 1.0700 mark.

In the meantime, price action around the European currency should continue to closely follow dollar dynamics, as well as the potential next moves from the ECB after the bank has already anticipated another 50 bps rate raise at the March event.

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: EMU Flash Consumer Confidence (Monday) – EMU New Car Registrations, EMU/Germany/France Advanced PMIs, Germany ZEW Economic Sentiment (Tuesday) – Germany Final Inflation Rate/IFO Business Climate, France Business Confidence (Wednesday) – EMU Final Inflation Rate (Thursday) – Germany Final Q4 GDP Growth Rate/GfK Consumer Confidence (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 Russia-Ukraine war on the growth prospects and inflation outlook in the region. Risks of inflation becoming entrenched.

EUR/USD levels to watch

So far, the pair is retreating 0.05% at 1.0689 and a drop below 1.0612 (monthly low February 17) would target 1.0481 (2023 low January 6) en route to 1.0328 (200-day SMA). On the other hand, the next up barrier emerges at 1.0804 (weekly high February 14) seconded by 1.1032 (2023 high February 2) and finally 1.1100 (round level).