Entering the Fed this week, the pair was threatening a major support level on the chart. The 200-day moving average (blue line) is where buyers draw the line, and they were rewarded yesterday with Fed Chairman Jerome Powell taking a more dovish view. This will help monitor the subsequent rebound above the 1.0900 mark.
With the dollar weakening across the board, the short-term bias for EUR/USD is also now more bullish. The pullback sees a push above the key hourly moving average at 1.0879-03. This reaffirms that buyers are once again in near-term control. So what's next for this pair?
There is a small daily resistance near 1.0950, which aligns with the 61.8 Fib retracement level at 1.0969. This is the next important area of ​​resistance to look out for on this pair.
In today's trading session, preliminary Eurozone PMI figures for March will also be announced. In previous months, this data set has tended to have a significant impact on the euro. But for this month, I would argue not so much.
As things stand, traders are already pricing in a roughly 86% chance of a June rate cut. And the ECB has recently made it very clear that it will consider its first rate cut as early as June. But policymakers have also made it clear that they are now monitoring wage data more closely than anything else. Lagarde reaffirmed that in comments here yesterday.
Barring any major surprises, the euro's reaction to future data itself is likely to be minimal. If anything, this data should serve as a reassurance that the ECB is on track to cut interest rates in June.