The EUR/USD currency pair is currently experiencing mild bearish pressure, trading below the 1.0900 level and approaching the support level at 1.0870. As investors await critical policy announcements from the European Central Bank (ECB) scheduled for Thursday, market activity appears subdued with few high-impact data releases to drive significant movements on Wednesday.
Recent shifts in risk sentiment have contributed to the US Dollar’s resilience against its major counterparts, stifling any potential recovery attempts for EUR/USD . The mixed performance of US stock index futures early Wednesday indicates a cautious market atmosphere. If investor preference for safe-haven assets continues into the market’s opening, it is likely that the EURO will remain under pressure.
Despite current trends, investors are hesitant to engage in prolonged selling of the EURO leading up to the ECB’s monetary policy decisions. Market expectations lean towards a possible reduction of key rates by 25 basis points, especially in light of recent Eurozone data highlighting ongoing disinflation and a slowdown in economic activity.
From a technical standpoint, the Relative Strength Index (RSI) on the 4-hour chart indicates that the EUR/USD pair might be poised for a short-term correction before any further downward movement. The Fibonacci 78.6% retracement level is currently considered immediate support at 1.0870. Should the currency pair break below this threshold, edging into a resistance position, selling pressures could intensify, with subsequent support areas identified at 1.0800 and 1.0780.
Conversely, if the pair manages to reclaim and stabilize above the 1.0900 level, selling interest may diminish, potentially leading to a more significant recovery. In such a scenario, primary resistance levels could emerge around 1.0950 and 1.1000, as traders assess the technical landscape in light of evolving economic conditions.
