EUR/USD turns negative and returns to 1.1440, focus on US data

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  • EUR/USD fades the initial spike to fresh highs near 1.1480.
  • Chairwoman Lagarde suggested inflation pressured should ease in 2022.
  • US Retail Sales surprised to the downside in December.

After climbing as high as the 1.1480 region, or new 2-month highs, EUR/USD deflated and returned to the mid-1.1400s, where it is now looking to stabilize.

EUR/USD faltered ahead of 1.1500

EUR/USD sees its weekly upside momentum curtailed on the back of the so far tepid recovery in the greenback, which encouraged the US Dollar Index (DXY) to bounce off multi-week lows near 94.60, an area coincident with the 100-day SMA.

Higher US yields also appear to have been tempering the sour sentiment around the buck and sponsoring at the same time the daily rebound.

No reaction in the European currency after ECB’s Lagarde reiterated once again that inflation is predicted to ease later in the year, adding that the central bank stands ready to take any measures in order to achieve the 2% target over the medium term. She also defended the ongoing accommodative stance of the monetary policy needed to drive inflation around the bank’s goal over the midterm. More blah blah blah here.

In what was the salient event of the week, US headline Retail Sales unexpectedly shrank 1.9% MoM in December. Same path followed Core sales after contracting 2.3% MoM.

Later in the session, Industrial/Manufacturing Production, Capacity Utilization, Business Inventories and the flash print of the Consumer Sentiment for the month of January area all due followed by the speech by NY Fed J.Williams (permanent voter, centrist).

EUR/USD levels to watch

So far, spot is losing 0.11% at 1.1442 and faces the next up barrier at 1.1505 (100-day SMA) followed by 1.1516 (200-week SMA) and finally 1.1692 (monthly high Oct.18 2021). On the other hand, a break below 1.1355 (55-day SMA) would target 1.1272 (2022 low Jan.4) en route to 1.1221 (monthly low Dec.15 2021).