The EUR/USD pair is recovering some ground on Thursday following the release of relatively hawkish ECB accounts. The EUR/USD has recovered the 1.0900 mark but remains vulnerable to further losses amid geopolitical uncertainty and a firm dollar.
The minutes from the European Central Bank's last meeting showed that many members believe that the high level of inflation called for immediate further steps towards policy normalization.
On Wednesday, the Federal Reserve also published the minutes of its last meeting, which confirmed that the Fed is moving to a more aggressive policy contraction and is poised to hike rates by 50 bps at the upcoming meeting on May 4.
US Treasury yields and the dollar have been rallying on the back of the Fed’s hawkish expectations, which has taken the EUR/USD to its lowest level in almost two years at 1.0805 in early March and temporarily inverted the US yield curve.
From a technical perspective, the EUR/USD holds a mildly bearish tone, according to technical indicators in the daily chart. The RSI and the MACD remain in negative territory, although the RSI is gaining an upward slope, signaling the loss of the bearish momentum.
At the same time, the EUR/USD pair trades below its main moving averages following five consecutive daily losses, with the 20 SMA acting as dynamic resistance and reinforcing the 1.1000 level.
In the 4-hour chart, the bias is turning slightly positive following today’s bounce as the EUR/USD tries to overcome the 20 SMA at the 1.0930 zone and the RSI gains an upward slope.
If the pair managed to break above this level, next resistances could be found at 1.1000 and then the 1.1070 zone. On the other hand, a loss of the 1.0900 level could intensify the selling pressure, sending the EUR/USD to this week’s low at 1.0865 en route to its YTD low at 1.0805.