EURUSD flirting with session highs near 1.2240, EMU CPI on sight

• The pair managed to rebound to the 1.2240 area, fresh peaks.
• Stronger USD post-Powell gave extra wings to the buck.
• EMU’s flash CPI figures for the month of February next on tap.

The European currency is posting marginal gains on Wednesday and is now lifting EUR/USD the 1.2235/40 band, or fresh daily tops.

EUR/USD now looks to CPI

The pair is looking to consolidate in the vicinity of the key support at 1.2200 the figure following yesterday’s sharp pullback, all amidst a better sentiment surrounding the buck.

In fact, the greenback gathered extra traction in response to the hawkish tone at Chief Powell’s semi-annual testimony on Tuesday. Powell emphasized the strong economic outlook and reinforced the view of a gradual tightening by the Fed throughout this year.

Powell’s tone confront Monday’s cautious comments from ECB’s Draghi, motivating the Fed-ECB policy divergence to come back to the fore as a significant driver for the pair’s price action, and this could give extra legs to USD as investors commenced to look to the possibility of four rate hikes by the Fed in 2018.

Data wise in the euro area, German Gfk Consumer Climate came in at 10.8 for the month of March, a tad lower than February’s reading. Later in the session, preliminary inflation figures for the next month are due in Euroland along with German labour market results.

Across the pond, advanced Q4 GDP figures are also due seconded by January’s Pending Home Sales.

EUR/USD levels to watch

At the moment, the pair is gaining 0.02% at 1.2235 and a breach of 1.2215 (low Feb.28) would open the door to 1.2206 (low Feb.9) and finally 1.2165 (low Jan.18). On the flip side, the next hurdle lines up at 1.2334 (10-day sma) seconded by 1.2349 (21-day sma) and then 1.2537 (high Jan.25).