Seems vulnerable while below 100-day SMA, 1.0800 mark

• EUR/USD snaps a three-day winning streak, albeit lacks any follow-through selling.
• The Fed rate cut uncertainty keeps the USD bulls on the defensive and lends support.
• The technical setup favours bearish traders and supports prospects for deeper losses.

The EUR/USD pair continues with its struggle to make it through the 100-day Simple Moving Average (SMA) barrier and meets with some supply during the Asian session on Friday. Spot prices currently trade around the 1.0770 area, down just over 0.05% for the day, and for now, seem to have stalled this week’s recovery from the lowest level in almost three months.

The US Dollar (USD) continues to be underpinned by the growing acceptance that the Federal Reserve (Fed) will keep interest rates higher for longer in the wake of a still-resilient US economy. Apart from this, expectations that the European Central Bank (ECB) will cut interest rates at the start of the second quarter act as a headwind for the shared currency and exert some downward pressure on the EUR/USD pair.

That said, the uncertainty about the likely timing and pace of interest rate cuts by the Fed holds back the USD bulls from placing aggressive bets. Moreover, the prevalent risk-on environment contributes to keeping a lid on any further appreciating move for the safe-haven Greenback. This, in turn, could lend some support to the EUR/USD pair and help limit deeper losses in the absence of any relevant macro data.

From a technical perspective, repeated failures to move back above the 100-day SMA and the emergence of some sellers ahead of the 1.0800 mark suggest that the recent downtrend from the December swing high is still far from being over. That said, any further slide is likely to find support near the 1.0745-1.0740 area and remain limited near the 1.0725-1.0720 region, or the multi-month low touched on Tuesday.

This is closely followed by the 1.0700 round figure, which if broken decisively will be seen as a fresh trigger for bearish traders and make the EUR/USD pair vulnerable to accelerate the slide further towards the 1.0665-1.0660 support. Spot prices could eventually drop to the 1.0620-1.0615 region and the 1.0600 mark.

On the flip side, the 1.0800 mark might continue to act as an immediate strong barrier. Any further move up is likely to meet with a fresh supply near the very important 200-day SMA, currently pegged near the 1.0830-1.0835 region. This should cap spot prices near a one-month-old descending trend line, around the 1.0860-1.0865 region. That said, a sustained strength beyond might shift the near-term bias in favour of bulls.

The subsequent short-covering move has the potential to lift the EUR/USD pair further and allow it to reclaim the 1.0900 round-figure mark.

EUR/USD daily chart

Technical levels to watch