- EUR/USD has snapped a five-day losing streak on Tuesday.
- The pair could continue to erase its losses if it manages to clear 1.0950 resistance.
- The improving market mood is helping the shared currency find demand early Wednesday.
EUR/USD has continued to push higher after posting its first positive daily close of March on Tuesday. The pair faces the first resistance at 1.0950 and it could extend its recovery if sellers fail to defend this level.
The improving market mood mid-week is helping the shared currency find demand while not allowing the greenback to continue to gather strength.
Reports suggesting that Ukraine was no longer insisting on a NATO membership revived hopes for a de-escalation of the conflict with Russia ahead of Thursday's talks between foreign ministers. Reflecting the upbeat market mood, Eurostoxx futures are rising more than 1% on the day and S&P futures are up 0.6%.
Meanwhile, US President Joe Biden announced a ban on all Russian oil imports late Tuesday while noting that European allies were not able to join the US in that action due to their dependency on energy imports.
Ahead of the European Central Bank's (ECB) policy announcements on Thursday, however, the common currency could find it difficult to preserve its bullish momentum. Additionally, investors might opt to remain on the sidelines before continuing to price a possible diplomatic solution to the conflict.
Later in the day, the US economic docket will feature January JOLTS Openings data and the US Energy Information Administration's weekly crude oil inventory report. The 10-year US Treasury note auction will also be looked upon for fresh insight into the market's risk perception.
In short, EUR/USD's rebound seems to be a technical correction for the time being. Although the pair could continue to push higher in the short term if risk flows dominate the markets, it needs a fundamental boost to turn bullish in a convincing way.
EUR/USD Technical Analysis
For the first time in more than a week, a four-hour candle closed above the 20-period SMA on Wednesday. The Relative Strength Index (RSI) indicator on the same chart, however, is yet to confirm a bullish shift as it remains below 50.
On the upside, 1.0950 (static level) aligns as the first resistance ahead of 1.1000 (psychological level) and 1.1050 (50-period SMA).
Supports are located at 1.0900 (psychological level), 1.0840 (static level) and 1.0800 (22-month low, psychologically level).
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