- EUR/USD attracts some buying during the Asian session on Tuesday, albeit lacks follow-through.
- A modest USD pullback lends support, though traders seem reluctant ahead of the Fed and the ECB.
- The mixed technical setup also warrants some caution before placing aggressive directional bets.
The EUR/USD pair edges higher during the Asian session on Tuesday and for now, seems to have snapped a five-day losing streak, stalling its corrective slide from the highest level since February 2022 touched earlier this week. Spot prices, however, lack bullish conviction and currently trade around the 1.1070-1.1075 region, up less than 0.10% for the day.
The US Dollar (USD) ticks down following the recent recovery from a 15-month low witnessed over the past five days and turns out to be a key factor lending some support to the EUR/USD pair. The upside potential, meanwhile, seems limited as traders might refrain from placing aggressive bets ahead of this week’s key central bank event risk – the FOMC policy decision on Wednesday, followed by the European Central Bank (ECB) meeting on Thursday.
From a technical perspective, the EUR/USD pair manages to find some support near the 100-period Simple Moving Average (SMA) on the 4-hour chart. This is closely followed by the mid-1.1000s, representing the 50% Fibonacci retracement level of the rally from the monthly swing low, which if broken decisively should pave the way for further losses. Spot prices might then accelerate the slide towards the 1.1000 psychological mark, or the 61.8% Fibo. level.
Given that oscillators on the daily chart – though have been losing traction – as still holding in the positive territory – the latter should act as a strong base for the EUR/USD pair. That said, a convincing break below will be seen as a fresh trigger for bearish traders and set the stage for an extension of the corrective decline.
On the flip side, the immediate hurdle is pegged near the 1.1100 round figure or the 38.2% Fibo. level, ahead of the 1.1125-1.1130 congestion zone and the 23.6% Fibo. level, around the 1.1165-1.1170 region. A sustained strength beyond will shift the bias back in favour of bullish traders and lift the EUR/USD pair further beyond the 1.1200 mark, towards testing the next relevant barrier near the 1.1250-1.1255 region and the YTD peak, around the 1.1275 area.
EUR/USD 4-hour chart
Key levels to watch
