EUR/USD Forecast: Bulls on the defensive below 100-DMA, focus on FOMC minutes

• The EUR/USD pair struggled to make it through 100-DMA.
• Reviving safe-haven demand now seemed to benefit the USD.
• Wednesday's focus will be on the release of FOMC minutes.

The EUR/USD pair edged higher for the fourth consecutive session on Tuesday, albeit lacked any strong follow-through and remained capped below 100-day SMA. Following an early dip to the 1.1060 region, the pair turned higher and was being supported by a modest intraday US dollar pullback. The lack of clarity on the US-China trade talks weighed on the market sentiment and led to another correction lower in the US Treasury bond yields, which eventually exerted some pressure on the greenback.

Trade developments, FOMC minutes in focus

Hopes for progress on trade disputes between the world's two largest economies rose again on Tuesday after Bloomberg reported that negotiations, which failed in May, would be considered a baseline in deciding if the US tariffs on China would be rolled back. The optimism, however, was offset by the US President Donald Trump warned of more tariffs if talks fail. Adding to this, the US Senate unanimously passed a bill aimed at protecting human rights in Hong Kong, which was further seen fueling tension between the negotiating parties.
 
Persistent US-China trade uncertainty kept investors cautious and was evident from a fresh wave of the global risk-aversion trade. The USD benefitted from reviving safe-haven demand and prompted some weakness around the major during the Asian session on Wednesday. Meanwhile, the downside remained limited, at least for the time being, as market participants refrained from placing any aggressive bets ahead of the release of minutes from the latest FOMC policy meeting, due later during the US trading session.

Short-term technical outlook

From a technical perspective, nothing seems to have changed much and bulls are likely to wait for a sustained move beyond the 100-day SMA barrier before positioning for any further near-term appreciating move. The mentioned hurdle is closely followed by 23.6% Fibonacci level of the 1.0879-1.1180 move up, above which the pair seems all set to aim towards testing the 1.1170-80 supply zone (double-top resistance) en-route the 1.1200 round figure mark.
 
On the flip side, any meaningful pullback now seems to find some support near the 1.1045 region (50-day SMA) ahead of 50% Fibo. level around the 1.1030 area, which should now act as a key pivotal point for short-term traders. Failure to defend the said support levels might turn the pair vulnerable to head back towards challenging the key 1.10 psychological mark. Some follow-through weakness below the 1.1000-1.0990 region (61.8% Fibo.) is likely to accelerate the fall further towards the 1.0955-50 region before the pair eventually drops to the 1.0900 round-figure mark.