EUR/USD STAYS BID AND LOOKS TO REGAIN 1.1000 AND ABOVE

• EUR/USD trades with decent gains around the 1.1000 mark.
• The dollar extends the selling mood on Tuesday.
• Germany GfK Consumer Confidence worsens to -15.5 in April.

The sentiment around the single currency improves further and motivates EUR/USD to climb to 2-day highs near 1.1020 on Tuesday.

EUR/USD LOOKS TO UKRAINE, USD

EUR/USD advances for the second session in a row on Tuesday and attempts to break above of the 1.1000 yardstick in a convincing fashion.

The renewed offered bias in the greenback allows the pair to extend the bounce off Monday’s lows in the 1.0940 region against the backdrop of some mild improvement in the risk complex and the resumption of the uptrend in German 10y yields, which approach the 0.65% level for the first time since May 2018.

In the meantime, Russian and Ukrainian official will meet once again today in Turkey amidst renewed hopes of a potential negotiated solution to the military conflict in Ukraine.

In the domestic docket, Germany’s Consumer Confidence tracked by GfK worsened to -15.5 in April. Across the pond, the focus of attention will be on the Consumer Confidence gauged by the Conference Board along with housing data and the speech by NY Fed J.Williams.

What to look for around EUR

EUR/USD reverses part of the recent weakness and retests the 1.1000 zone in response to the softer note in the greenback. Occasional pockets of strength in the single currency should appear reinforced by the speculation of the start of the hiking cycle by the ECB at some point by year end, while higher German yields, elevated inflation, the decent pace of the economic recovery and auspicious results from key fundamentals in the region are also supportive of a rebound in the euro.

Key events in the euro area this week: Germany GfK Consumer Confidence (Tuesday) – EMU Final Consumer Confidence, ECB Lagarde, Germany Flash Inflation Rate (Wednesday) – Germany Retail Sales, Unemployment Change, Unemployment Rate, EMU Unemployment Rate (Thursday) – Final EMU, Germany Manufacturing PMI, EMU Flash Inflation Rate (Friday).

Eminent issues on the back boiler: Asymmetric economic recovery post-pandemic in the euro area. Speculation of ECB tightening/tapering later in the year. Presidential elections in France in April. Impact of the geopolitical conflict in Ukraine.

EUR/USD levels to watch

So far, spot is gaining 0.27% at 1.1012 and faces the next up barrier at 1.1037 (high March 25) followed by 1.1137 (weekly high March 17) and finally 1.1205 (55-day SMA). On the other hand, a drop below 1.0944 (weekly low March 28) would target 1.0900 (weekly low March 14) en route to 1.0805 (2022 low March 7).