EUR/USD keeps the bid bias unchanged near 1.0970

• EUR/USD adds to the weekly uptrend and approaches 1.1000.
• Final Services PMIs in the euro area and the US are due later.
• Markets’ attention will also be on the US ADP report.

The buying interest around the European currency remains well and sound and motivates EUR/USD to edge a tad higher and flirt with the 1.0980 region on Wednesday.

EUR/USD appears bid ahead of data

EUR/USD extends the upside in place since the beginning of the week and with the next target at the key round level at 1.1000 the figure, always amidst the generalized flattish mood in the global markets and the lack of direction in the dollar.

Indeed, some consolidation as well as rising cautiousness seem to kick in ahead of key data releases – especially Friday’s US Nonfarm Payrolls – and against the backdrop of a shortened trading week due to Easter holidays.

In addition, the ECB-Fed divergence keeps bolstering the pair’s upside, particularly aft the JOLTs report on Tuesday reignited speculation of a likely pause at the Fed’s May event.

In the domestic calendar, final Services PMI in Germany and the broader Euroland advanced to 53.7 and 55.0, respectively, for the month of March. Across the pond, all the attention will be on the publication of the ADP Employment Change seconded by weekly Mortgage Applications, trade balance results, final Services PMI and the key ISM Non-Manufacturing.

What to look for around EUR

EUR/USD keeps the rally well and sound and a potential test of the key 1.1000 mark already emerges on the horizon.

In the meantime, price action around the single currency should continue to closely follow dollar dynamics, as well as the incipient Fed-ECB divergence when it comes to the banks’ intentions regarding the potential next moves in interest rates.

Moving forward, hawkish ECB-speak continue to favour further rate hikes, although this view appears in contrast to some loss of momentum in economic fundamentals in the region.

Key events in the euro area this week: Germany, EMU Final Services PMI (Wednesday) – Germany Construction PMI (Thursday).

Eminent issues on the back boiler: Continuation, or not, of the ECB hiking cycle. 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 gaining 0.01% at 1.0951 and a break above 1.0973 (monthly high April 4) would target 1.1032 (2023 high February 2) en route to 1.1100 (round level). On the flip side, the next support comes at 1.0788 (monthly low April 3) followed by 1.0745 (55-day SMA) and finally 1.0712 (low March 24).