• EUR/USD gyrates around Tuesday’s closing levels near 1.0650/40.
• Germany’s Business Climate improved a tad in February.
• The FOMC Minutes will take centre stage later in the session.

The single currency trades in a vacillating fashion and motivates EUR/USD to hover around the 1.0650/40 band in the European morning on Wednesday.

EUR/USD flattish ahead of FOMC Minutes

EUR/USD navigates without a clear direction in the mid-1.0600s amidst a mild bid bias surrounding the greenback.

The pair, in the meantime, keeps the range bound theme well in place, this time in the lower end of the monthly range against the backdrop of increasing prudence among traders in light of the release of the FOMC Minutes later in the NA session.

In the domestic calendar, final inflation figures in Germany showed the CPI rose 8.7% YoY in January and 1.0% vs. the previous month. Still in Germany, the Business Climate tracked by the IFO institute advanced modestly to 91.1 for the current month (from 90.1).

Across the pond and other than the publication of the FOMC Minutes, MBA Mortgage Applications will be the only data release of note.

What to look for around EUR

EUR/USD loses some traction amidst the gradual advance in the greenback on Wednesday.

In the meantime, price action around the European currency should continue to closely follow dollar dynamics, as well as 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 as well as the hawkish narrative from the ECB.

Key events in the euro area this week: Germany Final Inflation Rate/IFO Business Climate, France Business Confidence (Wednesday) – EMU Final Inflation Rate (Thursday) – Germany Final Q4 GDP Growth Rate/GfK Consumer Confidence (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle amidst dwindling bets for a recession in the region and still elevated inflation. Impact of the Russia-Ukraine war on the growth prospects and inflation outlook in the region. Risks of inflation becoming entrenched.

EUR/USD levels to watch

So far, the pair is retreating 0.01% at 1.0642 and a drop below 1.0612 (monthly low February 17) would target 1.0481 (2023 low January 6) en route to 1.0329 (200-day SMA). On the other hand, the next up barrier emerges at 1.0804 (weekly high February 14) seconded by 1.1032 (2023 high February 2) and finally 1.1100 (round level).