The EUR/USD faces renewed selling pressure due to a modest rise in USD demand. The current technical setup supports bearish traders, indicating a potential further decline. To reverse the near-term negative outlook, a sustained strength beyond the 1.0900 mark is necessary. During the Asian session on Wednesday, the pair encounters fresh selling interest, dropping to the 1.0815 region, perilously close to its lowest level since December 13 reached earlier this week.
The JOLTS report released on Tuesday unexpectedly revealed an increase in US job openings to 9.02 million in December, suggesting a robust labor market. This data implies that the Federal Reserve (Fed) is unlikely to consider interest rate cuts in the first quarter. Coupled with geopolitical tensions in the Middle East and China’s economic challenges, these factors contribute to the strength of the safe-haven US Dollar (USD), keeping it near its monthly peak and exerting pressure on the EUR/USD pair.
Nevertheless, the recent decline in US Treasury bond yields may impede aggressive bets by USD bulls ahead of the eagerly awaited FOMC monetary policy decision scheduled for later today. Additionally, uncertainty surrounding the timing of potential interest rate cuts by the European Central Bank (ECB) could act as a supportive factor for the shared currency. Consequently, this might help restrict any further downward movement for the EUR/USD pair.
From a technical standpoint, current spot prices appear to have settled below the 200-day Simple Moving Average (SMA). Furthermore, oscillators on the daily chart are showing negative momentum and are still some distance away from entering oversold territory. This suggests that the path of least resistance for the EUR/USD pair is tilted to the downside. However, bearish traders may exercise caution and wait for a sustained break and acceptance below the 1.0801 mark before considering new positions.
The potential subsequent decline could lead spot prices to the December monthly swing low, approximately in the 1.0730-1.0719 range, on the way to the 1.0702 mark. Extended selling pressure might reveal the next significant support near the 1.0658 region before the EUR/USD pair reaches the 1.0618-1.0612 zone and eventually approaches the 1.0601 round figure.
On the contrary, the 1.0848-1.0855 region, marked by the 200-day SMA, might serve as an immediate obstacle, followed by the 1.0885 area and the 1.0905 mark. Subsequently, a short-term support-turned-resistance breakpoint around the 1.0925 region could play a pivotal role. A decisive breakthrough here might trigger a short-covering rally, prompting the EUR/USD pair to make a fresh attempt at surpassing the psychological barrier of 1.0990.