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15 Mar 2023

EUR/USD meets strong resistance near 1.0760 ahead of data, ECB

  • EUR/USD looks to extend the ongoing recovery north of 1.0750/60.
  • Final Inflation Rate in France revised up in February.
  • US Producer Prices, Retail Sales will be the salient releases later.

The European currency alternates gains with losses vs. the greenback and prompts EUR/USD to keep hovering around the 1.0750/60 band on Wednesday.

EUR/USD looks at data, ECB

EUR/USD maintains the recovery from last week’s 2-month lows near 1.0520 well in place and on the back of the renewed bearishness surrounding the greenback, particularly following last Friday’s Non-farm Payrolls and exacerbated after the SVB collapse and February disinflation reignited speculation of a pause in the Fed’s hiking cycle.

In the meantime, the euro is expected to trade with a prudent note ahead of the ECB meeting on Thursday and with still firmer expectations pointing to a 50 bps interest rate hike.

In the docket, final inflation figures in France came in a tad above the preliminary readings for the month of February and showed the CPI rising 1.0% MoM and 6.3% over the last twelve months. Later in the session, the Industrial Production in the broader Euroland is also due.

Across the ocean, all the attention will be on Producer Prices and Retail Sales seconded by MBA Mortgage Applications, the NY Empire State Manufacturing Index, Business Inventories, the NAHB Housing Market Index and TIC Flows.

What to look for around EUR

EUR/USD struggles to advance further north of the 1.0750/60 band amidst increasing prudence among investors ahead of the ECB monetary policy meeting on Thursday.

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 past the March meeting, when the bank has already anticipated another 50 bps rate hike.

Key events in the euro area this week: EMU Industrial Production (Wednesday) – ECB Interest Rate decision, ECB Lagarde (Thursday) – EMU Final Inflation Rate (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 0.01% at 1.0731 and faces the next contention at 1.0555 (100-day SMA) seconded by 1.0524 (monthly low March 8) and finally 1.0481 (2023 low January 6). On the upside, the breakout of 1.0759 (monthly high March 15) would target 1.0804 (weekly high February 14) en route to 1.1032 (2023 high February 2).

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EUR/CHF to trade in a 0.9700-1.0000 range following SNB meeting – Credit Suisse

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