- EUR/USD tries to bounce back above 1.0700.
- EUR bulls lack conviction amid bearish technical pattern.
- The pair needs to convincingly recover 1.0746 to consolidate the rally.
EUR/USD is attempting to consolidate the recovery above 1.0700, although the bulls lack continuation, despite improving market sentiment and a broad pullback in the US dollar.
According to news, the European Union (EU) may consider capping prices paid to Russian oil importers, in another way to hit Kremlin revenue. This news is weighing on EUR bulls.
Meanwhile, the US dollar pullback looks temporary as Covid concerns in China and hawkish expectations around the Fed will continue to support the dollar.
The focus now shifts to consumer confidence data and US durable goods orders amid an empty data calendar in the EU. Investors also weigh Monday’s German IFO survey, which surprised markets to the upside.
On the other hand, Goldman Sachs has said in its latest report that it expects the ECB to raise interest rates by 25 basis points in July.
As seen on the daily chart, EUR/USD broke critical downtrend line support at 1.0746 amid Monday’s drop to a two-year low at 1.0696.
Next downside target remains at 1.0637, 2020 low.
The latest rally in the 14-day RSI is helping the pair rally. Although the indicator remains well below the midline while still above the oversold territory, which suggests that there is enough room for the EUR bears to come back.
EUR/USD daily chart
On the other hand, for the rally to gain momentum, the bulls need a sustained break above previous key support, now resistance at 1.0746.
Further up, the round 1.0800 level could challenge bears to commit, on track for Monday’s high of 1.0815.
EUR/USD additional levels
Source: Fx Street
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