EUR/USD Remains Defensive Near 1.1250 Amid Dollar Recovery
The EUR/USD pair is hovering just below the 1.1250 resistance zone as it continues its pullback from February 2022's highs. For the time being, the EUR/USD pair is under pressure as the US Dollar bulls are back in the market after a heavy sell-off period.
If we look at the RSI on EUR/USD h4 chart, it is printing near 80, which is an indication of overbought conditions but the EUR strength as well. So if we see a technical correction, the nearest support level will be 1.1200, followed by 1.160 and 1.150. After this, the next important support zone for the EUR bulls to defend will be 1.120, which is also the upper limit of the regression channel.
1.1270 & 1.1300 Remain Important Zones
If we look at the upside, the EUR/USD bulls will be facing the 1.1240 resistance zone followed by the 1.1270. Looking ahead, the 1.1300 resistance level is also important and probably contains a lot of pending sell orders.
For now, the EUR/USD was last seen retreating a little bit from a high of 1.1244 which is one of its highest levels in the last 12 months. Although the pair has retreated a little bit, it still remains supported above the 1.1200 zone.
After the release of the CPI (Consumer price index), the sell-off in the USD intensified, followed by the PPI, which also only showed a 0.1 gain YoY.
Based on the economic fundamentals, the dominant theme in the markets is USD bearish, but we may see some short-term strength as part of profit-taking.
Recently, some Fed members have talked about the need to continue the tightening policy. However, the situation on the ground has changed drastically, which will help the EUR/USD to stay bullish in the medium & long term.
The July meeting will lead us to another rate hike which will be against what the market wants, but it is already priced in. Now, the real question of what's ahead after the July meeting and the meeting minutes will reveal just that!