The Euro has continued its rise from Thursday's low of $1.1321 after a meeting between US Secretary Antony Blinken and Russian Foreign Minister Sergei Lavrov was agreed to for next week. This gave the Euro bulls something to cheer about as further diplomacy may be the answer to avert a conflict between Ukraine and Russia.
Apart from receiving support from a possible reduction in political tensions, the Euro is also being buoyed by fresh speculation of a potential interest rate hike by the ECB at some point this year which will keep the yield difference against the US dollar in check.
Looking ahead today, the main drivers of the EUR/USD currency pair will be the release of Consumer Confidence data by the European Commission which will be eyed by the market for any signs of a further rise in inflation
There will also be a speech from European Central Bank (ECB) Frank Elderson and investors will be looking for any signs on the timing of an interest rate hike.
In the American session will see the release of the existing home sales figures which will be followed by the Fed monetary policy report which will paint a clear picture on the current state of the American economy.
As we can see on the chart, the EUR/USD currency pair has found solid support at the $1,1348 mark and as long as there is no flair up in tensions between Ukraine and Russia, the critical support level should hold as we head into next week’s meeting between Blinken and Lavrov.
The ECB is also expected to revise its inflation forecast to the upside next week which will add to the case for a rate hike and provide a 2nd level of support for the Euro.