EUR/USD returns to 1.3750

FXStreet (Edinburgh) - After a brief bullish adventure beyond 1.3770, the EUR/USD is now returning to the area of 1.3755/50.

EUR/USD back to gains

The pair is posting gains for the first time since Monday despite softer than expected inflation figures in Germany, with headline CPI advancing 1.0% YoY and HICP up 0.9% YoY. The next risk event facing the pair would be Monday’s EMU’s advanced inflation figures - expected at 0.6% over the last twelve months – which would be crucial ahead of the ECB gathering on Thursday. “We expect that whether and how the ECB will address Eurozone deflation or disinflation risks in the months ahead will be a key driver for the Euro. The real economy would justify a much weaker EURUSD, but the ECB's relative monetary policy stance prevents it from happening. If the ECB were to loosen policies further, this could be a game-changer for the Euro, particularly taking into account that the ECB will be crossing a red line by moving into unconventional territory”, commented analysts at BofA Merrill Lynch Global Research.

EUR/USD relevant levels

At the moment the pair is up 0.07% at 1.3750 and a break above 1.3797 (high Mar.27) would open the door to 1.3825 (21-d MA) and finally 1.3827 (high Mar.26). On the downside, the immediate support lines up at 1.3704 (low Mar.8) followed by 1.3694 (low Feb.28) ahead of 1.3685 9daily cloud top).