The EUR/USD pair continues to struggle for recovery after a three-day decline. In the U.S., consumer inflation in February came out slightly higher than expected, fueling rumors that the Federal Reserve may postpone interest rate cuts. This, in turn, is considered supportive for the dollar in this pair.
On the euro side, representatives of the European Central Bank, for the most part, support the idea of the first rate cut in June and have also put forward the idea of further rate cuts in July. Consequently, this undermines the overall currency, thereby limiting the potential for the EUR/USD pair to rise.
However, markets still assess a higher probability that the U.S. Central Bank will also begin lowering interest rates in June, similar to the ECB. This is confirmed by the new drop in U.S. Treasury yields, preventing traders from aggressive bullish bets on the dollar, thus providing some support to the EUR/USD pair. Therefore, before preparing for further declines, it would be prudent to await strong subsequent sales.
From a technical perspective, spot prices show some resilience, halting the pullback from a two-month high. Moreover, oscillators on the daily chart are in positive territory and far from overbought, favoring the bulls. However, the lack of significant purchases requires caution.
At the same time, the overnight range's low near the round level of 1.0900 is likely to protect against an immediate decline. A convincing breakthrough could expose the 50-day SMA, located around 1.0850, and further the convergence of the 100 and 200 SMA, below which the EUR/USD pair could become vulnerable and accelerate further downward towards testing levels below 1.0800.
On the other hand, the 1.0950 zone may pose an immediate obstacle on the way to the psychological mark of 1.1000. Sustained growth beyond the round psychological figure will be considered a new trigger for the bulls and will lay the foundation for continuing the recent strong recovery from levels below 1.0700. After that, the pair may move higher.
