EUR/USD overcomes recent dip and aims towards 1.0400. Prior to data and Powell of the Fed, the dollar seems to be offered.

November is expected to witness a 10% YoY increase in the EMU Flash Inflation Rate.  On Wednesday, the single currency regains some equilibrium and pushes the EUR/USD to daily highs in the 1.0380/85 zone.

Before Powell, the EUR/USD seemed stable. After three consecutive days of daily declines, EUR/USD posts a respectable recovery and aims to retake the 1.0400 area as new dollar weakness hurts the currency.

The pair moves upward firmly despite a flat performance in US and German yields and increasing caution ahead of Chief Powell’s address later in the NA session.

Germany’s unemployment rate increased to 5.6% and by 17K individuals, respectively, in November, making for an intriguing calendar in the eurozone. Additionally, according to recent flash statistics, the headline CPI for the larger euro area increased by an annualized 10.0% in November, while the Core CPI increased by 5.0%.

Chair Powell will discuss “Economic Outlook, Inflation and the Labor Market” on the other side of the Atlantic. In contrast, FOMC Governor L. Cook will discuss “The Outlook for Monetary Policy and Observations on the Evolving Economy.”

MBA Mortgage Applications, the ADP Employment Change report, the Goods Trade Balance, an update to the Q3 GDP Growth Rate, Pending Home Sales, and the Fed’s Beige Book are among the other US data points that will be released.

What should I look for in the EUR?

In reaction to more downward pressure on the dollar on Wednesday, the EUR/USD bias is reaffirmed, and anticipation for Powell’s speech is still rising.

The euro is anticipated to closely track dollar fluctuations, the region’s reaction to the oil crisis, and the Fed-ECB gap in the interim. Additionally, for the time being, the only factor influencing the price movement of the pair is the markets’ re-pricing of a prospective Fed policy shift.

In the immediate term, it faces a significant internal headwind due to the growing concern about a possible recession in the euro region.

This week’s important events are in the euro region: Germany Retail Sales, ECB General Council Meeting, Germany/EMU Final Manufacturing PMI, EMU Unemployment Rate (Thursday), ECB Lagarde, and Germany Balance of Trade (Friday).

The continuation of the ECB’s rate hike cycle vs. rising recession concerns are important topics simmering in the background. Impact of the conflict in Ukraine and the ongoing energy shortage on the prognosis for inflation and growth in the area. Risks of persistent inflation.

Watching the EUR/USD levels

The pair is now up 0.37% at 1.0367 and will next encounter resistance at 1.0496 (a monthly high set on November 28), followed by 1.0500 (round level) and then 1.0614. (weekly high June 27). On the other hand, a break of 1.0330 (the weekly low from November 28) would aim for 1.0222 (the weekly low from November 21) before moving on to 1.0037. (100-day SMA).