EUR/USD REMAINS BID AND CLOSE TO 1.0900

EUR/USD advances to 2-day highs near 1.0915.

Flash German GDP figures disappointed in Q4.

EMU Consumer Confidence, Economic Sentiment improved in January.

The optimism around the single currency remains well and sound in the European afternoon, with EUR/USD posting decent gains near the 1.0900 hurdle.

EUR/USD: Daily gains capped near 1.0915

EUR/USD remains firm near the 1.0900 neighbourhood on the back of the small retracement in the dollar and inconclusive risk appetite trends at the beginning of the week.

So far, persistent cautiousness dominates the mood among investors ahead of key monetary policy meetings by the Fed and the ECB on Wednesday and Thursday, respectively.

Earlier in the session, the German economy is seen contracting 0.2% QoQ in Q4 and expanding 1.1% over the last twelve months, as per preliminary GDP readings. In addition, the final Consumer Confidence in the euro area improved to -20.9in January, while the Economic Sentiment also ticked higher to 99.9 in the same period.

Later in the NA session, the Dallas Fed Manufacturing Index will be the sole release on Monday.

What to look for around EUR

The sharp yearly rally in EUR/USD appears to have met an initial and decent barrier around the 1.0930 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 steps from the ECB and the Federal Reserve at their upcoming gatherings in the next 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.