. EUR/USD hovers around multi-week lows below 1.0600 - Capital Street FX

EUR/USD hovers around multi-week lows below 1.0600 – Capital Street FX

23 Feb 2023

EUR/USD remains under pressure and breaches 1.0600.

EMU Final inflation figures are next of note in the calendar.

Q4 GDP takes center stage in the US docket.

Sellers keep the price action around the European currency subdued and prompt EUR/USD to pierce the 1.0600 support to clock new multi-week lows on Thursday.

EUR/USD puts the 1.0600 neighborhood to the test amidst the continuation of the gradual decline on Thursday, always against the backdrop of the relentless march north in the greenback.

Indeed, the pair navigates an area last traded during the first week of the new year amidst the equally, albeit in the opposite direction, an uptick in the greenback to new multi-week highs in the 104.66/70 band

No news around the pair leaves the ongoing speculation of the Fed’s tighter-for-longer stance as the exclusive driver of the sentiment around the pair for the time being. At the same time, expectations of a 50-bps rate hike by the ECB and a 25-bps raise in the Fed Funds Target Range by the Fed, both due in March, appear firm.

In the domestic calendar, final figures of the inflation during January in the broader Euroland will be the salient event on this side of the Atlantic, while another revision of the Q4 GDP Growth Rate, Initial Claims, and the Chicago Fed National Activity Index will be in the limelight later in the NA session.

EUR/USD loses further traction and slips back to the sub-1.0600 region, or multi-week lows, on Thursday.

In the meantime, price action around the European currency should continue to closely follow dollar dynamics and the potential next moves from the ECB after the bank has already anticipated another 50-bps rate raise at the March event.

Back to the euro area, recession concerns now appear to have dwindled, which at the same time remain an important driver sustaining the ongoing recovery in the single currency and the hawkish narrative from the ECB.