The EURUSD currency pair, also known as the Fiber, is trading at 0.39% lower on Wednesday’s trading session following the Eurozone inflation data that showed that the inflationary pressures in the Eurozone are easing. The recent Eurozone inflation released on Wednesday showed that year-on-year inflation in March eased to 6.9% from 8.5%, but Core inflation data shows it rose to the expected 5.7% from 5.6%. The soft inflation data weakened the Euro against the US Dollar.

On the contrary, intense negative pressure from the recovery of the US Dollar threatens to continue to strip the currency pair of the recent gains. Thus, without major economic indicators, the currency pair movement will be driven by the bets on the upcoming interest rate decision by the Federal Reserve and the ECB, which are expected to hike their respective interest rates by 25 basis points, respectively, in May.

Technical

The Fiber has come under selling pressure following the bulls’ failure to push above the 23.60% Fibonacci retracement level at 1.09880.

Therefore, should the bear continue to tighten their grip on the price action, the immediate support could be the upward trending resistance line which has previously supported the pair’s upward rally. A break below through the upward trendline would bring the support level at 1.08866, a level of significance for the bears, into play. A sustained break below 1.08866 would entice the bulls to target the 1.08524 support level as the next level of significance.

However, should the bulls regain control in the short term, the 1.09664 resistance level could act as the first barrier to the rally, with the 23.60% Fibonacci retracement level at 1.09880 acting as the next. The sustained breakthrough above the 23.60% Fibonacci retracement level could signal the presence of buying momentum. The buying momentum could aid the bulls’ attempt to break above the next resistance level at 1.10043, a fraction of the 12-month high of 1.10758.

Summary

However, with the market pricing in a potential 25-basis point rate hike for both the ECB and Fed, the market chatter from both central banks could drive the pairs’ movement during the trading session. ECB Chief Economist Philip Lane and Governing Council member Isabel Schnabel address, and with the Fed’s Beige Book due later today, a potential exists that the Fiber could trade within the support level at 1.08866 and 1.09664 resistance level range.

Sources: TradingView, Reuters, CNBC, Trading Economics.

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