EURUSD is exposed to further losses under the 1.0665 mark, and duo seems weak. The German Ifo data has continued to improve, and a slight recession in Q is likely. Only an aggressive surprise likely keep the dollar index rally intact. CPI, Retail sales, and PMI will be discussed after the FOMC Minutes later today.

EURUSD Fundamental Perspective

In the Asian session, the EURUSD saw small gains while probing a crucial area of support and turned resistance around the 1.06650 mark. Since then, the Euro has found it difficult to cling to gains relative to the US dollar. As mounting geopolitical tensions appear to be discouraging the Euro bulls.

Flash PMIs from yesterday’s Eurozone data indicated further improvement. exceeding expectations in the service sector but slightly declining in manufacturing.

In Germany and the Euro Area, expectations and actual conditions outperformed forecasts, which was reflected in the Zew Sentiment Survey.

EURUSD pair is impacted by German Ifo data

German inflation numbers for Jan, which increased from Dec, were released this morning. Supporting remarks made by ECB President Christine Lagarde calling for a 50bps increase at the next meeting of the ECB.

According to Ifo Economists,45.4 percent of the businesses reported supply chain constraints in Feb. This contributed to the Ifo Business Climate for February continuing to rise.

While stating that a German recession would not be averted but is predicted to be modest, compared to 48.4 percent in January. Another win for the Euro Area, but a reminder that problems still exist.

FOMC Memo OF Meeting

The Federal Reserve meeting minutes, which will be released later today, will provide more details on how close we got to a 50bps raise in February. Also, it ought to give market players a sense of the Fed policymakers’ expectations for future rate increases.

EURUSD banks on Rate Hike Likelihood

In light of the recent increase in expectations of a rate hike and the abundance of encouraging data that followed the February meeting. We do not believe that tonight’s publication will significantly affect the markets or be sufficient to sustain the Dollar rise.

The likelihood of a top rate of 5.25 percentage points in Jun is currently priced at 58.7 percent in the markets. Up from 46 percent a week ago and 3.2 percent a month earlier.

If this happens, there is a good likelihood that the dollar surge loses pace and EURUSD ticks up. When the ECB increases its own hawkish language, a 50bps increase in March is expected.

Source: CME Fedwatch Tool

German 10-year government bond yield increased by more than 3 percentage points and stabilized over 2.5 percent in the wake of the positive PMI data releases from Germany and the Eurozone.

According to The Financial Times, swap markets now factoring in a terminal ECB deposit rate of 3.75 percentage points by September as opposed to the present rate of 2.5 percent.

In a similar vein, Deutsche Bank reported that they had increased their projection for the ECB terminal rate from 3.25 percentage points to 3.75%.

Updating on the situation. At its meetings in March and May, the ECB is currently predicted by Deutsche analysts to increase interest rates by 50 basis points (bps). then a final increase of 25bp in June. Reuters clarified.

Investors Eyeing US FOMC meeting minutes

Markets will be watching debates about the Fed’s potential to revisit further rate increases for cues. The US Dollar is likely to beat its competitors if the release indicates that authorities are amenable to returning to 50 bps raises.

On the other hand, if the minutes reveal that voting FOMC officials rejected the notion of larger rises in the policy rate. The USD may lose its appeal.

Technical Perspective

Technically speaking, the daily candle for the EURUSD pair closed below the crucial 1.06650 level. From a technology standpoint, this important support-resistance zone is the key. And a break over it is likely to lead to a positive week’s conclusion for the duo.

A push toward the 1.0700 level and possibly higher will follow a breach just above the 1.06650 mark. As a substitute, support is located near the 1.0600 mark. Then, below that at 1.0550 should we decide to gradually move downward.

 Key Tecnical Indicators

Moving Averages