EUR/USD climbs to 4-week highs past 1.0730

The EUR/USD pair picks up extra pace and trespasses the 1.0700 barrier. The dollar remains on the defensive and drops to 7-month lows.

Bulls push harder at the beginning of the week and lift EUR/USD to the 1.0730 region for the first time since mid-December.

EUR/USD leaves behind the 1.0700 barrier to clinch fresh multi-week peaks always on the back of the persevering sell-off in the dollar, which comes pari passu with investors’ re-assessment of the potential next steps by the Federal Reserve when it comes to future interest rate hikes.

This change of perspective from market participants have been reignited soon after the publication of the December’s Nonfarm Payrolls last Friday. Indeed, while the mixed tone from the monthly US labour market showed a still healthy job creation, the wage growth seems to have lost some momentum and that is what is leading traders to start pricing in some probable pause in the Fed’s hiking cycle.


On another page, and in the euro docket, the Unemployment Rate in the broader Euroland remained at 6.5% in November, while the Investor Confidence gauged by the Sentix Index improved a tad to -17.5 for the current month.

Across the pond, the Consumer Credit Change will be the sole release as well as 3-month/6-month bill auctions.

EUR/USD has embarked on a strong recovery and has already surpassed the 1.0700 barrier. The extent and duration of the breakout, however, should hinge on the risk trends and dollar dynamics.

The next steps regarding monetary policy – and particularly the ongoing tightening cycles – from both the ECB and the Fed will be crucial in determining the direction of the pair’s price action in the next months.