EUR/USD Forecast: Seems poised to resume the recent bullish run, back towards 1.15 mark

The EUR/USD pair witnessed some aggressive long-unwinding trade on Tuesday and extended the previous session's rejection slide from the vicinity of the key 1.1500 psychological mark, or one-year tops. The US dollar staged a strong recovery on hopes of fiscal stimulus by the Trump administration and was seen as one of the key factors behind the pair's sharp intraday fall of over 175 pips.

The market reacted positively to the news and was evident from a bullish mood across the global equity markets. The risk-on flows allowed the US Treasury bond yields to rebound sharply from historic lows and underpinned the greenback demand. The pair tumbled back below the 1.1300 round-figure mark, albeit showed some resilience at lower levels and managed to regain some positive traction during the Asian session on Wednesday.

The greenback, however, failed to capitalize on the overnight strong gains and was being weighed down by the fact that the US President Donald Trump delayed the release of an economic stimulus package. This coupled with nervousness over the coronavirus epidemic continued weighing on investors' sentiment. This was evident from a fresh leg down in the US equity futures and the US bond yields, which kept the USD bulls on the defensive.

Moving ahead, market participants will now look forward to the release of the latest US consumer inflation figures, due later during the early North-American session. The headline CPI is expected to ease to 2.2% YoY rate in February as compared to 2.5% previous and might provide some impetus. Following the data, the US Treasury Secretary Steven Mnuchin will testify on the Proposed Fiscal Year 2021 Budget, which should play a key role in influencing the USD price dynamics and produce some meaningful trading opportunities.

Short-term technical outlook

From a technical perspective, the overnight pullback might still be categorized as a corrective slide amid overbought conditions on the daily charts. The emergence of some dip-buying further reinforces the near-term positive outlook and supports prospects for the resumption of the recent bullish run. In the meantime, the 1.1380-1.1400 region now seems to act as an immediate resistance, above which the pair is likely to make a fresh attempt towards the 1.1500 mark.

On the flip side, the 1.1325 level, closely followed by the 1.1300 round-figure mark might now protect the immediate downside. Failure to defend the mentioned support levels, leading to a subsequent weakness below the overnight swing lows, around the 1.1275 region, might prompt some technical selling and accelerate the fall back towards the 1.1200 round-figure mark. Some follow-through selling has the potential to drag the pair back towards a one-year-old descending trend-channel resistance breakpoint, near the 1.1170-65 region.