• EUR/USD’s upside remains limited by the 1.0700 zone.
• The greenback starts the week on the back foot ad extends losses.
• Producer Prices in Germany surprised to the upside in February.

The lack of direction in the global markets prevails in the European morning and motivates EUR/USD to alternate gains with losses near the 1.0670 region at the beginning of the week.

EUR/USD: Next on the upside comes 1.0760

EUR/USD looks to extend the positive bias seen in the second half of the last week with the immediate target at the 1.0700 neighbourhood ahead of the so far monthly peak near 1.0760 (March 15).

The inconclusive price action around the pair falls within the equally vacillating mood around the greenback and the rest of the global assets in a context where market participants remain prudent in light of the developments around the banking sector and the imminence of the FOMC gathering.

In the domestic calendar, Producer Prices in Germany contracted at a monthly 0.3% in February and rose 15.8% from a year earlier. In addition, and later in the session, ECB Chair C.Lagarde is due to speak.

Across the pond, short-term bill auctions will be the sole release later on Monday.

What to look for around EUR

EUR/USD’s intentions to extend the rebound seem to have met some resistance around the 1.0700 zone for the time being.

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 in a context still dominated by elevated inflation, although amidst dwindling recession risks for the time being.

Key events in the euro area this week: EMU Balance of Trade, ECB Lagarde (Monday) – EMU, Germany ZEW Economic Sentiment, ECB Lagarde (Tuesday) - ECB Lagarde (Wednesday) – EMU Flash Consumer Confidence, European Council Meeting (Thursday) - European Council Meeting, EMU, Germany Flash PMIs (Friday).

Eminent issues on the back boiler: Continuation, or not, of the ECB hiking cycle. 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 0.08% at 1.0655 and faces the next contention at 1.0516 (monthly low March 15) seconded by 1.0481 (2023 low January 6) and finally 1.0325 (200-day SMA). On the upside, a surpass of 1.0759 (monthly high March 15) would target 1.0804 (weekly high February 14) en route to 1.1032 (2023 high February 2).