EUR/USD bounces off lows around 1.1300, back near 1.1350

• EUR/USD meets support in the 1.1300 neighbourhood.
• The dollar looks offered on the back of lower yields.
• ECB Lagarde, flash Consumer Confidence next on tap.

The single currency regains the smile at the end of the week and helps EUR/USD returning to the 1.1350 region.

EUR/USD up on dollar weakness

EUR/USD manages to reverse Thursday’s pullback and meets buying interest in the 1.1300 zone, regaining upside traction soon afterwards. The recent price action in spot falls within a consolidative theme, always amidst alternating risk appetite trends in the global markets.

Friday’s uptick in spot comes amidst the offered stance in the greenback, which in turns appears under pressure amidst another decline in US yields along the curve.

In the euro calendar, the European Commission (EC) will publish its Consumer Confidence gauge for the month of January along with speeches by ECB’s Board member Fernandez-Bollo and Chairwoman Lagarde.

Across the pond, the only release will be the Leading Index tracked by the Conference Board.

What to look for around EUR

EUR/USD came under pressure after hitting new YTD highs in the 1.1480 region earlier in the month, finding some contention in the low-1.1300s so far this week. In the meantime, the Fed-ECB policy divergence and the performance of yields are expected to keep driving the price action around the pair for the time being. ECB officials have been quite vocal lately and now acknowledge that high inflation could last longer in the euro area, sparking at the same time fresh speculation regarding a move on rates by the central bank by end of 2022. On another front, the unabated advance of the coronavirus pandemic remains as the exclusive factor to look at when it comes to economic growth prospects and investors’ morale in the region.

Key events in the euro area this week: ECB Lagarde, EC’s Flash Consumer Confidence (Friday).

Eminent issues on the back boiler: Asymmetric economic recovery post-pandemic in the euro area. ECB stance/potential reaction to the persistent elevated inflation in the region. ECB tapering speculation/rate path. Italy elects President of the Republic in late January. Presidential elections in France in April.

EUR/USD levels to watch

So far, spot is gaining 0.27% at 1.1341 and faces the next up barrier at 1.1480 (100-day SMA) seconded 1.1482 (2022 high Jan.14) and finally 1.1510 (200-week SMA). On the other hand, a break below 1.1300 (weekly low Jan.21) would target 1.1272 (2022 low Jan.4) en route to 1.1221 (monthly low Dec.15 2021).