The EUR/USD pair has retraced back into the regression channel after dropping below 1.0720. It now faces potential support at the psychological level of 1.0700 and a static level. A sustained four-hour close below this level could attract further selling pressure, potentially pushing the pair towards 1.0660.
The release of PCE figures and remarks made by Mester have increased the likelihood of another 25 basis points Fed rate hike in June, which has risen above 60% compared to just 25% a week ago. This has contributed to the resilience of the US Dollar (USD) against other currencies, including the Euro (EUR), and is currently limiting the upside potential of EUR/USD.
Please note that these factors are currently influencing the short-term dynamics of the pair.