EUR/USD extends the upside bias beyond 1.1000

• EUR/USD climbs to fresh monthly highs above 1.1000.
• Final CPI in Germany matched the preliminary readings in March.
• US Producer Prices, Initial Claims take centre stage later in the session.

Further upside motivates EUR/USD to trespass the key 1.1000 barrier and print new monthly highs on Thursday.

EUR/USD now targets the 2023 peak at 1.1032

EUR/USD advances for the third session in a row and continues to challenge the key 1.1000 neighbourhood so far on Thursday, always amidst the persistent weakness in the greenback and the generalized upbeat mood in the risk-linked space.

In the meantime, hawkish narrative from ECB policymakers continue to lend legs to the pair’s ongoing recovery against the backdrop of divided opinions regarding the size of the next interest rate hike at the May gathering.

In the docket, final inflation figures in Germany showed the CPI rose 7.4% in the year to March and 0.8% vs. the previous month. Later in the session, EMU Industrial Production is due, while weekly Claims and Producer Prices will be in the limelight in the US calendar.

What to look for around EUR

EUR/USD advances beyond the 1.1000 and records new monthly peaks on Thursday.

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 Final Inflation Rate, EMU Industrial Production (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 0.26% at 1.1020 and a break above 1.1032 (2023 high February 2) would target 1.1100 (round level) en route to 1.1184 (weekly high March 21 2022). On the flip side, the next support comes at 1.0788 (monthly low April 3) followed by 1.0750 (55-day SMA) and finally 1.0712 (low March 24).