EUR/USD prepares for Lagarde’s hawkish remarks at ECB forum, US data below 1.0950

• EUR/USD grinds near intraday high, extends week-start recovery ahead of key catalysts.
• Risk-on mood, China market intervention weigh on US Dollar and favor Euro buyers.
• Hawkish comments from ECB’s Kazaks, Bundesbank’s optimism can help Lagarde to defend rate hikes.
• US Durable Goods Orders, CB Consumer Confidence also eyed for clear directions.

EUR/USD defends the week-start rebound as Euro bulls occupy the driver’s seat heading into Tuesday’s European session. In doing so, the major currency pair remains firmer around 1.0925 as it makes rounds to the intraday top ahead of the key catalysts from the old continent, as well as from the US.

That said, the market’s cautious optimism and the softer US Dollar adds strength to the Euro pair’s upside momentum as the European Central Bank (ECB) Forum kick-starts with the key speeches, after an uneventful official beginning on Monday. Additionally, hawkish comments from the ECB official and optimism by the German bank also allow the EUR/USD bulls to keep the reins.

US Dollar Index (DXY) drops for the second consecutive day, down 0.16% intraday near 102.60 by the press time. That said, the greenback’s gauge versus the six major currencies bears the burden of China-inspired risk-on mood and money market adversaries.

People’s Bank of China’s (PBoC) lower-than-expected fixing of the USD/CNY price joined the alleged selling of the US Dollar by the Chinese state banks in the offshore currency markets to weigh on the USD. Additionally, news the Asian lobbyists are advocating for easies rules for Chinese equities’ listing and headlines suggesting an end to fears surrounding Moscow’s mutiny allow the traders to remain optimistic.

At home, European Central Bank (ECB) policymaker Matin Kazaks recently said that he sees the central bank raising interest rates beyond the July meeting if inflation remains too high. On Monday, Germany's Bundesbank ruled out recession woes in its monthly report by saying that the German economy appears to have bottomed out and is forecast to post a small growth in the Gross Domestic Product (GDP) in the second quarter (Q2).

Against this backdrop, S&P500 Futures print the first daily gains in three by bouncing off the lowest levels in eight days, up 0.30% intraday near 4,382 at the latest, whereas the US 10-year and two-year Treasury bond yields grind higher of late but fail to underpin the USD rebound.

On the contrary, Monday’s upbeat US activity data from Dallas Fed joins the geopolitical fears emanating from Russia, due to Moscow’s tactical flight exercises over the Baltic Sea, weighing on the EUR/USD pair.

It’s worth noting that the looming recession woes on the bloc and the comparatively upbeat US data, as well as the Fed, can challenge the pair buyers should ECB President Christine Lagarde fail to impress the hawks during her speech at the ECB Forum. Additionally, strong US statistics may also exert pressure on the quote. That said, US Durable Goods Orders for May, expected -at 1.0% versus 1.1% prior, as well as the US Conference Board’s (CB) Consumer Confidence for June, expected to arrive at 103.90 versus 102.30 prior, will be important to watch.

Technical analysis

EUR/USD justifies a U-turn from the 50-day Exponential Moving Average (EMA), around 1.0850 by the press time, as well as the bullish MACD signal and upbeat RSI (14) line, to aim for the resistance area surrounding 1.0950 and 1.1000 comprising multiple levels marked since early April.