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EUR/USD:FUNDAMENTAL + TECHNICAL PATTERN ANALYSIS | LONG SETUP 🔔

Long
FX:EURUSD   Euro / U.S. Dollar
EUR/USD has extended its slide toward 1.0800 early Wednesday.
The pair needs to reclaim 1.0860 to attract bulls.
A drop below 1.0800 could ramp up the technical selling pressure.
EUR/USD has declined toward 1.0800 in the early European session on Wednesday amid the unabated dollar strength. Although the pair managed to recover modestly, it might find it difficult to attract buyers unless it reclaims 1.0860.

During the American trading hours on Tuesday, EUR/USD climbed above 1.0900. After the data from the US showed that the Core Consumer Price Index rose to 6.5% on a yearly basis in March, compared to the market expectation of 6.6%, US T-bond yields fell sharply and caused the dollar to weaken.

US March Consumer Price Index: Another 40-year record for inflation , but worse was feared.

Hawkish Fed commentary, however, helped the greenback regather its strength. The US Dollar Index ( DXY ) was last seen trading at its strongest level in nearly two years at around 100.50.

Fed Vice Chair Lael Brainard said on Tuesday that the reduction in the balance sheet could start as early as June. Additionally, Richmond Fed President Thomas Barkin argued that they should quickly get interest rates up to a level where borrowing costs will no longer be stimulating the economy. According to the CME Group FedWatch, markets are pricing in a 65% probability of back-to-back 50 basis points Fed rate hikes in May and June, compared to 57% a week ago.

There won't be any high-tier macroeconomic data releases featured in the European economic docket on Wednesday and the dollar's market valuation should continue to drive EUR/USD's action. Later in the day, the Producer Price Index (PPI) from the US will be looked upon for fresh impetus.

In the meantime, US stock index futures are up between 0.4% and 0.7%. Even if risk flows start to dominate the financial markets in the second half of the day, however, investors might refrain from making large euro bets ahead of the European Central Bank's (ECB) policy announcements on Thursday.
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