• EUR/USD fades the initial knee-jerk and regains 1.0300.
• The dollar remains offered in the wake of US CPI results.
• US Producer Prices will be the salient event in the calendar.

The optimism around the European currency looks unabated and bulls now push EUR/USD back to the area beyond 1.0300 the figure on Thursday.

EUR/USD bolstered by risk appetite

EUR/USD trades with gains since Monday and looks to consolidate the recent breakout of the key 1.0300 hurdle always on the back of the intense offered stance in the US dollar.

Indeed, sellers so far remain in control of the sentiment surrounding the greenback, particularly after US inflation showed signs of slowing down its pace in July, as per Wednesday’s releases.

Along with the above, the probability of a 75 bps rate hike by the Fed next month continues to dwindle, which is another factor dragging hurting the buck’s mood.

Nothing scheduled data wise in Euroland on Thursday should leave the attention to the publication of US Producer Prices and Initial Claims.

What to look for around EUR

EUR/USD breaks above the 1.0300 hurdle with certain conviction helped by the intense drop in the dollar in the wake of lower-than-expected US CPI prints for the month of July.

Price action around the European currency, in the meantime, is expected to closely follow dollar dynamics, geopolitical concerns, fragmentation worries and the Fed-ECB divergence.

On the negatives for the single currency emerges the so far increasing speculation of a potential recession in the region, which looks propped up by dwindling sentiment gauges and the incipient slowdown in some fundamentals.

Key events in the euro area this week: EMU Industrial Production (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle. Italian elections in late September. Fragmentation risks amidst the ECB’s normalization of monetary conditions. Impact of the war in Ukraine on the region’s growth prospects and inflation.

EUR/USD levels to watch

So far, spot is gaining 0.27% at 1.0327 and faces the next up barrier at 1.0368 (monthly high August 10) seconded by 1.0371 (55-day SMA) and finally 1.0615 (weekly high June 27). On the flip side, a break below 1.0096 (weekly low July 26) would target 1.0000 (psychological level) en route to 0.9952 (2022 low July 14).