• EUR/USD climbs to 2-day highs near 1.0750.
• Flash EMU Q4 GDP due later in the domestic docket.
• US inflation figures take centre stage later in the NA session.

The European currency extends the auspicious start of the week and pushes EUR/USD to the area of 2-day peaks near 1.0750 on Tuesday.

EUR/USD looks firm ahead of data

EUR/USD so far advances for the second session in a row and manages to extend further Monday’s rebound past the 1.0700 mark.

The daily uptick in the pair comes in tandem with the continuation of the selling pressure in the dollar amidst steady cautiousness prior to the release of US inflation figures due later across the pond.

Declining US yields across the curve, in the meantime, accompany the daily retracement in spot along with further range bound in the German 10-year Bund yields.

Later in the euro area, another revision of the Q4 GDP will be the sole release in the region on Tuesday.

What to look for around EUR

EUR/USD seems to have embarked in a decent bounce following Monday’s drop to the 1.0650 region, although the resistance line around 1.0800 continues to cap occasional bullish attempts for the time being.

In the meantime, price action around the European currency should continue to closely follow dollar dynamics, as well as the potential next moves from the ECB after the central bank delivered a 50 bps at its meeting last week.

Back to the euro area, recession concerns now appear to have dwindled, which at the same time remain an important driver sustaining the ongoing recovery in the single currency as well as the hawkish narrative from the ECB.

Key events in the euro area this week: ECOFIN Meeting, EMU Flash Q4 GDP (Tuesday) – EMU Balance of Trade, Industrial Production, ECB Lagarde (Wednesday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle amidst dwindling bets for a recession in the region and still elevated inflation. Impact of the Russia-Ukraine war on the growth prospects and inflation outlook in the region. Risks of inflation becoming entrenched.