EURO REGAINS BALANCE AND FOCUSES ON 1.0700

The Euro trades with small gains vs. the US Dollar.

European stocks retreated from tops on Friday.

US inflation figures will drive the sentiment this week.

The Euro (EUR) looks to extend Friday’s optimism against the US Dollar (USD), encouraging EUR/USD to attempt another move to the 1.0700 zone at the beginning of the week.

On the flip side, the Greenback runs out of steam following Friday’s ephemeral visit to weekly peaks around the 106.00 barrier when tracked by the USD Index (DXY).

In the meantime, the divergence between recent hawkish Fedspeak and investors’ perceptions of a protracted pause in the Fed’s normalization programme is expected to dictate the price action around the US dollar for the time being.

Around the European Central Bank (ECB), there was nothing new in recent comments from President Christine Lagarde other than reiterating that inflation remains too elevated and that the bank should bring inflation down to its target in a timely fashion and maintain the current restrictive stance for a longer period.

Daily digest market movers: Euro keeps the bid bias near 1.0700 

The EUR approaches the key 1.0700 yardstick vs. the USD.

US and German yields kick off the week with marginal moves.

Investors expect the Fed to refrain from hiking rates in December.

The ECB is seen entering an impasse in its tightening campaign.

Geopolitical effervescence remains unabated in the Middle East.

Markets’ attention should remain on US CPI and PPI.

Technical Analysis: Euro faces immediate support at the 55-day SMA

EUR/USD looks to extend the upbeat mood and retargets the key barrier at 1.0700 the figure on Monday.

Further recovery could see EUR/USD revisit the November top of 1.0754 (November 6) prior to the 200-day SMA at 1.0801 and the weekly peak of 1.0945 (August 30). The psychological level of 1.1000 comes next ahead of the August high of 1.1064 (August 10) and another weekly top of 1.1149 (July 27), all preceding the YTD peak of 1.1275 (July 18).

If sellers regain the upper hand, the pair might initially face transitory contention at the 55-day SMA at 1.0640 ahead of the weekly low of 1.0495 (October 13), and the 2023 low of 1.0448 (October 15).

So far, further weakness in the pair remains on the cards while below the 200-day SMA