During the European trading session, the EUR/USD currency pair has exhibited a bearish trend, dropping below 1.0900. This decline is primarily driven by the rebound of the US dollar.

The Greenback has strengthened following statements from several Federal Reserve (Fed) officials, who emphasized their commitment to maintaining interest rates at their current levels for an extended period.

This more restrictive monetary policy stance tends to support the US Dollar, contributing to the EUR/USD pair’s losses. Traders and investors are closely monitoring developments in monetary policy and economic indicators for insights into the future direction of the currency pair.

Fed’s Hawkish Stance Boosts US Dollar, Drives EUR/USD Losses

On the US front, the US dollar has regained traction due to hawkish comments from Fed policymakers. They stressed the need to keep interest rates steady, indicating a firm stance on monetary policy.

Despite a positive inflation report, the Fed remains cautious about the possibility of rate cuts. This sentiment has led to a rebound in the US Dollar, contributing to the EUR/USD pair’s decline.

Schnabel’s Cautionary Remarks Exert Downward Pressure on EUR/USD

In Europe, ECB Board member Isabel Schnabel’s comments have further pressured the EUR/USD pair.

She cautioned against premature interest-rate cuts, advocating for a careful approach beyond the anticipated June rate cut. Schnabel highlighted the challenges in the final stages of disinflation and the potential inflation risks associated with cutting rates too soon.

These remarks have added to the downward pressure on the EUR/USD, signalling uncertainty about extending rate cuts beyond June.

EUR/USD Price Forecast

Currently, EUR/USD is trading at $1.08626, down 0.04% for the day. The 4-hour chart highlights a pivot point at $1.08544, serving as a critical level of support. Immediate resistance is identified at $1.08754, followed by $1.08951 and $1.09132.

These resistance levels are pivotal for any potential bullish momentum, as breaking above them could signal further gains. On the downside, immediate support is seen at $1.08408, with further support levels at $1.08223 and $1.07966.

These support levels are crucial for maintaining the current trend, as a break below them could indicate a shift towards a bearish outlook. The 50-day Exponential Moving Average (EMA) at $1.08325 provides additional support, aligning closely with the current price and suggesting a stabilization point.

The Relative Strength Index (RSI) is currently at 56, indicating a balanced market with moderate bullish momentum. An RSI above 50 typically suggests a positive trend, though the level of 56 indicates there is still room for upward movement without entering overbought territory.

The recent price action in EUR/USD shows a pattern of consolidation around the pivot point, suggesting indecision among traders. The pair’s ability to stay above the pivot point of $1.08544 is crucial for a sustained bullish trend.

However, the presence of strong resistance levels nearby indicates that significant upward movement may face challenges.

In conclusion, the technical outlook for EUR/USD remains cautiously bullish above the pivot point of $1.08544. Investors should closely watch upcoming economic data and central bank communications for further guidance on the currency pair’s trajectory.