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  • EUR/USD reclaims the 1.2200 mark on Monday.
  • German flash CPI surprised to the upside in May.
  • Investors’ focus remains on US Payrolls, ISM due later in the week.

The European currency keeps the narrow daily range well in place and now motivates EUR/USD to return to the positive ground in the 1.2200 region.

EUR/USD faces the next target at 1.2270

EUR/USD looks to leave behind Friday’s pullback, although marginal trade conditions and lack of volatility due to the US holiday so far leave spot within the daily range and around the 1.2200 neighbourhood.

In fact, the US Memorial Day holiday plus the UK’s bank holiday drain markets off activity and motivate global assets to keep the consolidative mood at the beginning of the week.

Data wise in Euroland, German advanced inflation figures for the month of May noted consumer prices are expected to have risen 0.5% inter-month and 2.5% from a year earlier, both prints coming in above estimates.

What to look for around EUR

EUR/USD recorded new 4-month highs near 1.2270 during last week before sellers subsequently dragged it to the 1.2130 region, where some decent contention turned up so far. The better mood in the euro remains largely underpinned by the improved sentiment in the risk appetite and the perseverant bearish stance in the greenback, all amidst rising optimism on the recovery in the euro area, which appears in turn supported by the firmer pace of the vaccine rollout. In addition, better-than-expected key fundamentals pari passu with the surging morale in the bloc also props up the upbeat mood surrounding the pair.

Key events in the euro area this week: German labour market report, flash EMU CPI (Tuesday) – German Retail Sales, ECB Lagarde (Thursday) – Germany/EMU Final Composite PMI.

Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the vaccine rollout. Probable political effervescence around the EU Recovery Fund. German elections.

EUR/USD levels to watch

So far, spot is gaining 0.08% at 1.2200 and faces the next hurdle at 1.2266 (monthly high May 25) followed by 1.2300 (round level) and finally 1.2349 (2021 high Jan.6). On the flip side, a break below 1.2132 (low May 28) would target 1.2051 (weekly low May 13) en route to 1.1985 (monthly low May 5).