- DXY bulls take a breather as the index falls below 101.
- The Fed has also opened doors for a 75-bps rate hike.
- The EUR/USD analysis at the London session is on the bullish side, as the pair recovered their losses to move beyond 1.080.
The EUR/USD price recovers on Wednesday as the US dollar retreats after a prolonged rally. In addition, Eurozone industrial production jumped in February, which boosted the EUR bulls.
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The rise in production
According to Eurostat statistics released today, the Eurozone’s Industrial Production rose in February, indicating that the industrial sector’s recovery is resuming.
The bloc’s industrial production increased by 0.7 percent month on month, compared to a 0.7 percent gain forecast and -0.7 percent last year.
The common currency has remained stronger due to the positive industrial figures. At the time of writing, the EUR/USD pair is up 0.69 percent on the day, trading at 1.0863.
DXY bulls cool the heels
The dollar’s rise surpassed, if briefly, the 101.00 level in the early half of the week, but it came under market pressure today. So far, the greenback’s price action has been determined by the Fed’s likelihood of a tighter rate path and geopolitics.
The battle of the banks
On the one hand, the Fed appears to be torn between raising interest rates by 50 basis points (bps) or 75 bps to manage the inflation issue.
Meanwhile, supply chain constraints and rising energy prices have left the ECB with little choice but to maintain its neutral position.
EUR/USD data events ahead
With Industrial production already released today, we don’t have anything significant from the Eurozone.
The typical weekly Mortgage Applications monitored by MBA are due, followed by Existing Home Sales and speeches by Fed M.Daly and Chicago C.Evans on the US docket.
What’s next to watch for EUR/USD price?
The stronger industrial data has provided an upside path for the single currency. However, investors will be looking at the broad-based USD’s strength.
EUR/USD price technical analysis: Trading in green for now
The EUR/USD price is wobbling around the 1.0842 level. At the time of writing, it is trading at 1.0834, with an increase of 0.51% so far.
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On the 4-hour chart, 20 and 50 SMAs are below the price. It signifies a mild bullish trend. The next key support level for the pair is 1.0761. If the price goes above this level, it can dip towards 1.0734. On the other hand, the next resistance is at 1.0868. If the price goes above this level, we can see it further climbing towards the 1.0900 level.
The volume data shows a declining trend for the recent upside move. It indicates that the recovery attempt will remain shallow.
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Saqib Iqbal
