Around the 0.9700 region, the EUR/USD fluctuates between gains and losses. On Tuesday, the dollar seemed modestly bid over the 113.00 barrier. Italian Industrial Production is the next item on the agenda, in ECB-speak.

In the 0.9670 area, the EUR/USD pair seems to have some resistance. It is now trying to climb back up to the 0.9700 barrier and above.

Risk patterns as EUR/USD look to the USD

After four straight days of losses, the EUR/USD shows some signs of life as it holds around the 0.9700 level on Tuesday.

The pair’s bullish effort coincides with the dollar’s marginal gains and a sudden rise in the benchmark 10-year German bond, reaching new 11-year highs of over 2.35% earlier in the week.

Italian Industrial Production will be the only domestic release, followed by remarks from A. Enria and P. Lane of the ECB. The FOMC’s Harker and Mester will also speak across the pond on an otherwise vacant schedule.

What to watch for in the EUR/USD

So far this week, the EUR/USD has seemed to encounter some early resistance near the 0.9670/65 zone.

Price movement around the euro is anticipated to closely track dollar trends, geopolitical tensions, and the Fed-ECB divergence in the interim. The latter is anticipated to continue to grow in light of recent findings from critical economic indicators, given the continued strength of the US economy.

Additionally, the growing fears of a regional recession – which seem to be supported by declining mood indicators and an impending downturn in certain fundamentals – contribute to the pessimistic outlook for the euro.

This week’s significant events in the eurozone include EMU Industrial Production, ECB Lagarde on Wednesday; Germany’s final inflation rate on Thursday; and the EMU 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.

EUR/USD Levels to Monitor

The pair is now up 0.15% at 0.9712, and if it surpasses 0.9999 (the week’s high on October 4), it will go for 1.0050 (the week’s high on September 20) and eventually 1.0197. (monthly high September 12). The immediate support, however, is around 0.9535 (2022 low September 28), followed by 0.9411 (weekly low June 17, 2002), and ultimately 0.9386. (weekly low June 10, 2002).