For the second consecutive day, the EUR/USD pair remains in consolidation, maintaining a narrow range around 1.08399–1.08752. Yesterday, amid a modest weakening of the U.S. dollar caused by the disappointing publication of the ISM Non-Manufacturing Business Activity Index, spot prices increased slightly, though the momentum slowed above the weekly high around 1.0875.
Traders are reluctant to open aggressive bearish positions on the U.S. dollar. They prefer to await more clarity regarding the Federal Reserve's direction on interest rate cuts. As a result, the pivotal factor influencing the dynamics of U.S. dollar prices will be the testimony of Federal Reserve Chairman Jerome Powell before Congress.
In addition, traders should look to U.S. macroeconomic data – the ADP private employment report and JOLTS data on job vacancies. Also, the European Central Bank meeting on Thursday and the monthly U.S. employment data, widely known as the Non-Farm Payrolls (NFP) report, to be published on Friday.
Meanwhile, a reduction in expectations for a more aggressive easing of ECB policy may continue to support the overall currency and help limit any corrective decline in the EUR/USD pair.
From a technical standpoint, recent repeated failures to breach the 1.0900 level require caution for the bulls. Therefore, before preparing for a continuation of the strong recovery of the EUR/USD pair from the year's low below 1.0700, reached on February 14th, it would be wise to wait for some subsequent buying beyond the round figure of 1.0900.
The fundamental background suggests that the path of least resistance for spot prices is upward and supports the prospect of some buying on the dip.
