EUR/USD remains depressed on stronger USD, manages to hold above 1.0800 mark
|- EUR/USD drifts lower for the second straight day amid some follow-through USD buying.
- Bets for a June ECB rate cut undermine the Euro and further contribute to the downfall.
- Traders might refrain from placing fresh bets ahead of the US PCE Price Index on Friday.
The EUR/USD pair extends the previous day's rejection slide from the 100-day Simple Moving Average (SMA) resistance near the 1.0865 region and remains under some selling pressure for the second straight day on Wednesday. Spot prices, however, manage to hold above the 1.0800 mark during the Asian session, though seem vulnerable to slide further amid some follow-through US Dollar (USD) buying.
The USD Index (DXY), which tracks the Greenback against a basket of currencies, climbs back closer to a multi-week high touched last Friday and remains well supported by the optimistic view for the US economy. The outlook was reinforced by the slightly better-than-expected release of US Durable Goods Orders data on Tuesday, which might force the Federal Reserve (Fed) to keep rates higher for longer amid still-sticky inflation. This, along with a softer risk tone, underpins the safe-haven buck and exerts some pressure on the EUR/USD pair.
The shared currency, on the other hand, is weighed down by rising bets for a June rate cut by the European Central Bank (ECB). In fact, ECB policymaker Madis Muller said on Tuesday that we are closer to a point where the central bank can start cutting rates. Adding to this, ECB official Yannis Stoumaras commented that there is a consensus for a June rate cut. This is seen as another factor that contributes to the offered tone surrounding the EUR/USD pair and supports prospects for an extension of over a two-week-old downtrend.
Moving ahead, Wednesday's economic docket features the release of the Spanish CPI report, which might influence the common currency and provide some impetus in the absence of any relevant data from the US. The focus, however, remains glued to the US Personal Consumption and Expenditure (PCE) Price Index on Friday. The crucial data will be looked for more cues about the Fed's policy path. This, in turn, should influence the near-term USD price dynamics and help determine the next leg of a directional move for the EUR/USD pair.
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