EUR/USD Analysis: Resilient below 1.10 mark, focus shifts to German CPI/US GDP

The EUR/USD pair failed to capitalize on the previous session's attempted recovery move and came under some renewed selling pressure on Wednesday. The shared currency failed to gain any respite from better-than-expected German GFK Consumer Confidence Index, which edged up to 9.9 for January from the previous month's upwardly revised reading of 9.7. The prevailing bullish sentiment surrounding the US dollar was seen as one of the key factors that kept exerting some downward pressure and dragged the pair to fresh two-month lows. The greenback remained well supported by signs of a strengthening economy, reinforced by Tuesday's impressive jump in the US consumer confidence index to the highest level since August.

FOMC does little to provide any impetus

Meanwhile, the market reaction to the Fed's monetary policy announcement turned out to be rather muted and did little to provide any meaningful impetus. As was widely expected, the US central bank left its benchmark rate unchanged in the range of 1.5% to 1.75%. In the accompanying policy statement, the Fed reiterated that the current monetary policy stance remained “appropriate”. At the post-meeting press conference, the Fed Chair Jerome Powell admitted that he was not satisfied with inflation running below the 2% target, fueling market expectations that the Fed would lower interest rate by at least once this year.

Apart from this, persistent demand for the safe-haven Japanese yen – amid concerns about the outbreak of the coronavirus – kept the USD upside in check and helped the pair to find some support at lower levels. The pair once again showed some resilience below the key 1.10 psychological mark and recovered around 20 pips from daily lows. The modest rebound extended through the Asian session on Thursday as market participants now look forward to the German Prelim consumer inflation data and the Advance US GDP growth figures for the last quarter of 2019.

Short-term technical outlook

From a technical perspective, the pair's repeated bounce from ahead of November swing lows support could be seen as initial signs of seller exhaustion. However, the fact that the pair have failed to capitalize on the bearish fatigue, any meaningful recovery still seems elusive. Hence, attempted positive move back towards the 1.1060-70 confluence resistance might still be seen as an opportunity to initiate some fresh bearish positions. The mentioned barrier comprises of 50% Fibonacci level of the 1.0879-1.1239 positive move and 100-day SMA, which should now act as a key pivotal point for short-term traders.

On the flip side, bearish traders are likely to wait for a sustained break through November monthly swing lows support, near the 1.0980 region, before positioning for any further near-term depreciating move. The pair then is likely to accelerate the slide towards challenging the 1.0900 round figure mark.