• EUR/USD adds to Wednesday’s gains and advances through 1.0800.
• ECB Accounts, Chairwoman Lagarde come next in the docket.
• Weekly Claims, housing results and the Philly Fed Index due next in the US.

The European currency kicks in the second half of the week in a positive fashion and lifts EUR/USD back above the 1.0800 hurdle on Thursday.

EUR/USD looks at ECB, data

EUR/USD advances for the second session in a row and keeps well in place the multi-day consolidative mood around the 1.0800 neighbourhood.

The daily improvement in the pair comes in tandem with further decline in the greenback and the continuation of the retracement in US and German yields, all against the backdrop of a favourable context for the risk complex.

Extra support for the European currency also comes after ECB’s Board member Knot suggested the central bank is expected to raise rates by 50 bps multiple times and that underlying inflation pressures remain unabated.

Later in the session, the ECB Accounts will take centre stage along with the speech by Chair Lagarde at the WEF in Davos on “Finding Europe’s New Growth”.

In the US calendar, Building Permits, Housing Starts, Initial Jobless Claims and the Philly Fed Manufacturing Index are all due followed by speeches by FOMC’s S.Collins (voter, centrist) and Vice Chair L.Brainard (permanent voter, dove).

What to look for around EUR

EUR/USD bounces off recent lows in the 1.0770/65 band and manages to regain the 1.0800 mark and beyond amidst the better mood in the risk-associated universe.

Price action around the European currency should continue to closely follow dollar dynamics, as well as the impact of the energy crisis on the euro bloc and the Fed-ECB divergence.

Back to the euro area, the increasing speculation of a potential recession in the bloc emerges as an important domestic headwind facing the euro in the short-term horizon.

Key events in the euro area this week: ECB Lagarde, ECB Accounts (Thursday) - ECB Lagarde (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle amidst diminishing probability of a recession in the region. Impact of the war in Ukraine and the protracted energy crisis on the bloc’s growth prospects and inflation outlook. Risks of inflation becoming entrenched.

EUR/USD levels to watch

So far, the pair is gaining 0.20% at 1.0815 and faces the next up barrier at 1.0887 (monthly high January 18) followed by 1.0900 (round level) and finally 1.0936 (weekly high April 21 2022). On the flip side, the breakdown of 1.0766 (weekly low January 17) would target 1.0513 (55-day SMA) en route to 1.0481 (monthly low January 6).