EUR/USD clinches fresh tops near 1.1830 ahead of ECB

• EUR/USD regains the 1.18 mark and above as dollar retreats.
• The greenback comes under pressure on lower yields.
• ECB Accounts will be next on tap in the domestic calendar.

The single currency regains the smile and some composure and now lifts EUR/USD back above the key 1.18 mark on Thursday.

EUR/USD now looks to the ECB

EUR/USD so far manages well to leave behind three consecutive sessions with losses, including a drop to new lows near 1.1780 on Wednesday, and retake the 1.18 mark and above.

Despite risk appetite remains subdued, lower US yields seem to be hurting the mood around the buck and spark a corrective downside in the US Dollar Index (DXY) from recent multi-month tops.

Later in the euro area, the ECB will release its Accounts from the latest meeting, while Chairwoman Lagarde will give a press conference on the results of the ECB strategy review.

In the US docket, the usual weekly Claims are due seconded by the EIA’s report on crude oil inventories.

What to look for around EUR

The recent strong pullback in EUR/USD appears to have met some decent contention around 1.1780 for the time being. Price action around spot, in the meantime, is expected to exclusively follow dollar dynamics, particularly after the latest FOMC gathering underpinned prospects of higher inflation and potential tapering before anticipated. Further out, support for the European currency comes in the form of auspicious results from fundamentals in the bloc coupled with higher morale, a strong rebound in the economic activity and the investors’ appetite for riskier assets.

Key events in the euro area this week: ECB Accounts (Thursday), ECB strategy review – ECB’s Lagarde (Friday).

Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the vaccine rollout. Probable political effervescence around the EU Recovery Fund. German elections. Investors’ shift to European equities.

EUR/USD levels to watch

So far, spot is gaining 0.27% at 1.1822 and faces the next resistance at 1.1895 (weekly high Jul.6) followed by 1.1975 (weekly high Jun.25) and finally 1.1999 (200-day SMA). On the other hand, a breakdown of 1.1781 (monthly low Jul.7) would target 1.1762 (78.6% Fibo of the November-January rally) and route to 1.1704 (2021 low Mar.31).