EUR/USD regains traction and advances to the 1.1340 area, focus on ECB-speak

• EUR/USD extends further the bounce off YTD lows near 1.1260.
• The broad-based risk-on mood sustains the upside in spot.
• ECB-speak, US Initial Claims, Philly Fed Index next of note.

The single currency started the second half of the week on a positive note and pushes EUR/USD to 2-day highs around 1.1340 on Thursday.

EUR/USD up on risk appetite

EUR/USD finally manages to post decent gains beyond 1.1300 the figure, leaving behind at the same time six consecutive daily pullbacks on Thursday.

The better note in the risk-associated galaxy coupled with the ongoing corrective downside in the dollar helps the pair to extend the rebound from Wednesday’s 16-month lows near 1.1260, always amidst declining yields on both sides of the Atlantic.

Absent releases in the euro docket, the focus of attention is expected to gyrate around speeches by ECB Board members F.Panetta, E.Fernandez-Bollo and P.Lane.

Across the ocean, the usual Initial Claims are due seconded by the always relevant Philly Fed Index as well as speeches by FOMC’s Williams, Evans and Daly.

What to look for around EUR

EUR/USD comes to life after bottoming out in new lows near 1.1260 on Wednesday amidst some corrective decline in the dollar and lower yields. As usual, the pair’s price action is predicted to mainly track the dynamics around the buck, while bouts of intermittent strength are expected to come from the improvement in the risk complex. On the more macro view, the loss of momentum in the economic recovery in the region - as per some weakness observed in key fundamentals – coupled with rising cases of COVID-19 is also seen pouring cold water over investors’ optimism. Further out, the euro should remain under scrutiny amidst the implicit debate between investors’ speculations of a probable lift-off sooner than anticipated and the ECB’s so far steady hand, all amidst the tenacious elevated inflation in the bloc and increasing conviction that it could last longer than previously anticipated.

Key events in the euro area this week: ECB’s Panetta, Fernandez-Bollo, Lane (Thursday) - ECB Lagarde (Friday).

Eminent issues on the back boiler: Asymmetric economic recovery post-pandemic in the region. Sustainability of the pick-up in inflation figures. Pick-up in the political effervescence around the EU Recovery Fund in light of the rising conflict between the EU, Poland and Hungary on the rule of law. ECB tapering speculations.

EUR/USD levels to watch

So far, spot is gaining 0.10% at 1.1330 and faces the next up barrier at 1.1445 (10-day SMA) followed by 1.1524 (20-day SMA) and finally 1.1609 (weekly high Nov.9). On the other hand, a break below 1.1263 (2021 low Nov.17) would target 1.1185 (monthly low Jul.1 2020) en route to 1.1168 (low Jun.19 2020).