Following fresh multi-week lows in the 1.0900 neighbourhood, EUR/USD now manages to pick up some upside traction and reclaims the 1.0930 zone on Friday.

EUR/USD looks bid on risk-on mood

EUR/USD partially reverses Thursday’s strong decline to the 1.0900 area on the back of the better tone in the risk complex, which in turn forces the Greenback to give away some of its recent strong gains.

The uptick in the pair, as well as the improvement in the risk appetite, appears also reflected in the US and German money markets, where yields reverse part of the recent weakness and attempt a tepid bounce.

Around the ECB, usual hawk Board member J. Nagel reiterated that inflation remains too high and advocated for a faster pace of the quantitative tightening (QT) process from July.

Nothing to write home about from the euro docket on Friday should leave the attention to the release of the advanced Michigan Consumer Sentiment for the current month later in the NA session.

What to look for around EUR

EUR/USD attempts a mild rebound following the reversal to 4-week lows in the 1.0900 neighbourhood recorded on Thursday.

The movement of the euro's value is expected to closely mirror the behaviour of the US Dollar and will likely be impacted by any differences in approach between the Fed and the ECB with regards to their plans for adjusting interest rates.

Moving forward, hawkish ECB-speak continue to favour further rate hikes, although this view appears in contrast to some loss of momentum in economic fundamentals in the region.

Eminent issues on the back boiler: Continuation (or not) of the ECB hiking cycle. Impact of the Russia-Ukraine war on the growth prospects and inflation outlook in the region. Risks of inflation becoming entrenched.