EUR/USD Forecast: Bulls at the mercy of USD price dynamics, German/US macro data eyed

• Some aggressive USD long-unwinding provided a goodish lift to EUR/USD on Tuesday.
• The positive momentum faltered ahead of 1.0900 mark, albeit the pullback seemed limited.
• The US Senators agreed over a massive fiscal stimulus package and helped regain traction.

The EUR/USD pair gained some strong positive traction on Tuesday, albeit struggled to capitalize on the move and finally settled around 100 pips off multi-day tops. The intraday positive momentum seemed rather unaffected by disastrous Eurozone PMI prints and was solely sponsored by broad-based US dollar weakness. The Fed's unprecedented QE program to buy unlimited amounts of Treasury bonds and mortgage-backed securities prompted some aggressive USD long-unwinding trade and turned out to be one of the key factors that provided a goodish lift to the major.

Meanwhile, the Fed's open-ended and unlimited QE boosted investors' confidence and triggered a strong rally across the global equity markets. The risk-on flow dampened demand for traditional safe-haven assets and was evident from a goodish pickup in the US Treasury bond yields, which helped limit the USD downside and kept a lid on any runaway rally for the major. The pair stalled its strong intraday positive move, rather faltered ahead of the 1.0900 round-figure mark and ended the day with modest gains, just below the 1.0800 mark.

The pair managed to regain some positive traction during the Asian session on Wednesday after the US Senate finally reached an agreement on a stimulus package to offset any negative impact from the coronavirus pandemic on the US economy. The news did little to provide any meaningful boost to the greenback but remained supportive of improving global risk sentiment. It, however, remains to be seen if the pair is able to build on the move up or once again meets with some fresh supply at higher levels. Market participants now look forward to the release of the final German IFO Business Climate Index for some impetus.

Later during the early North-American session, the US Durable Goods Orders data for February might influence the USD price dynamics and further contribute towards producing some meaningful trading opportunities. The key focus, however, will remain on developments surrounding the coronavirus saga, which remains an exclusive driver of the broader market risk sentiment and continue to infuse volatility in the global financial markets.

Short-term technical outlook

From a technical perspective, the pair's inability to find acceptance above 23.6% Fibonacci level of the 1.1497-1.0636 downfall and subsequent pullbacks suggest that the near-term bearish pressure might still be far from being over. However, any meaningful pullback might continue to attract some dip-buying near mid-1.0700s, which should now act as a key pivotal point for short-term traders.

A sustained break through the mentioned support is likely to accelerate the slide towards the 1.0715-10 horizontal zone before the pair eventually breaks below the 1.0700 mark and accelerates the fall further towards mid-1.0600s. Some follow-through selling has the potential to drag the pair towards testing sub-1.0600 level en-route the next major support near the key 1.0500 psychological mark.

On the flip side, the 1.0880-1.0900 region might continue to act as an immediate strong resistance, which if cleared decisively, might prompt some short-covering move and lift the pair towards 38.2% Fibo. level, around the 1.0960 region. The momentum could further get extended beyond the key 1.1000 psychological mark towards challenging 100-day SMA resistance, currently near the 1.1035 region.