The EURUSD at a price of 1.09188 is showing hesitation in justifying the strength of the US Dollar. However, after a downtrend spanning three days, it is gradually rising.

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• EUR/USD hesitates justifying US Dollar strength, grind higher after three-day downtrend.

The pair currently trades last at 1.09188.

The previous day high was 1.0946 while the previous day low was 1.0907. The daily 38.2% Fib levels comes at 1.0922, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.0931, expected to provide resistance.

EUR/USD edges higher past 1.0900 amid early hours of Wednesday’s Asian session, defending the late Tuesday’s rebound from the lowest levels in three days around 1.0920, as markets prepare for the week’s key events. In doing so, the Euro pair stays defensive despite broad US Dollar strength as the European Central Bank (ECB) Officials remain hawkish about future policy moves.

European Central Bank (ECB) policymaker Boris Vujčić said on Tuesday that they have to consider the risk of doing too much vs too little, adding that a soft landing might not be possible. On the other hand, ECB Governing Council member, Olli Rehn said that the underlying inflation is easing ‘only gradually’.

It should be noted that Germany’s Producer Price Index (PPI) rises by 1.0% for May versus 1.7% YoY expected and 4.1% prior whereas the monthly figures spread disappointment with -1.4% mark compared to -0.7% market forecasts and 0.3% previous readings. Previously, downbeat German and Eurozone statistics raised recession woes in the bloc.

On the other hand, Federal Reserve Governor Lisa Cook said “I am committed to promoting sustained economic growth in a context of low and stable inflation,” in her statement to be given before the Senate on Wednesday. Further, Federal Reserve Governor Philip Jefferson said, “I remain focused on returning it to our 2% target.”

That said, US Housing Starts jumped to the highest level since April 2022 by rising 21.7% MoM in May versus -2.9% (revised from +2.2%) recorded in April and -0.8% market forecasts. On the same line, Building Permits were also upbeat for the said month, up 5.2% MoM versus -5.0% expected and -1.4% previous readings (revised from -1.5%).

Apart from the Fed versus ECB play and the data counters, the market’s risk-off mood also allowed the US Dollar to remain firmer and weigh on the EUR/USD price. That said, the sentiment soured after the People’s Bank of China (PBoC) cut two key lending rates (Loan Prime Rate (LPR) and Medium-term Landing Facility (MLF) rate for the first time in almost a year. Additionally weighing on the risk appetite was the US-China tension about Taiwan.

Amid these plays, the Wall Street benchmark began the week on the negative side while the US Treasury bond yields also snapped a two-day winning streak.

Moving on, EUR/USD traders should pay attention to the speeches from second-tier ECB officials ahead of Fed Chair Jerome Powell’s bi-annual Testimony. Should Powell defends the hawkish moves, the Euro pair may witness further downside.

Unless providing a daily close beyond the 1.0945-50 immediate resistance zone, the EUR/USD pair remains vulnerable to testing convergence of the 21-day and 50-day Exponential Moving Average (EMA), around 1.0835-30 by the press time.

Technical Levels: Supports and Resistances

EURUSD currently trading at 1.0919 at the time of writing. Pair opened at 1.0922 and is trading with a change of -0.03% % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 1.077, 50 SMA 1.088, 100 SMA @ 1.0808 and 200 SMA @ 1.0546.

The previous day high was 1.0946 while the previous day low was 1.0907. The daily 38.2% Fib levels comes at 1.0922, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.0931, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1.0904, 1.0886, 1.0865
• Pivot resistance is noted at 1.0943, 1.0964, 1.0982

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