EURUSD Analysis: Testing Breakout Potential Ahead of Fed's Powell Speec

EURUSD Analysis - The EUR/USD pair is under selling pressure during the Asian session on Wednesday, moving away from its new weekly highs around the 1.0975 region touched the previous day. The spot price is currently trading just below the mid-1.0900s, down about 0.15% for the day, and for now, it seems to have halted its two-day consecutive rally. This technical analysis is based on data from FXstreet.com.

The hawkish outlook from the Federal Reserve (Fed), along with the US macro data released on Tuesday, helped the US Dollar (USD) regain positive traction, which, in turn, is seen pulling the EUR/USD pair lower.

Additionally, concerns over the economic impact of higher borrowing costs are weighing on expectations for further interest rate hikes by the European Central Bank (ECB) and weakening the Euro's exchange rate. However, traders may be reluctant to take big risks ahead of Federal Reserve Chairman Jerome Powell’s appearance at the ECB's Central Banking Forum in Sintra today.

From a technical perspective, any further decline is likely to find significant support around the 1.0935-1.0930 zone, which is composed of the 100-hour and 200-hour Simple Moving Averages (SMA). This area is expected to be a key level, and if broken, could lead to more selling pressure technically.

The EUR/USD pair may be vulnerable to further weakness below the psychological 1.0900 level and could experience a faster decline to test the lows of last week around the 1.0845 zone. A follow-up of selling would be a trigger for bearish traders and could lead to additional losses in the short term.

On the other hand, the 1.0975 level, which is the weekly high, currently acts as a direct resistance before reaching the psychological 1.1000 level. Any further gains are likely to attract sellers around the resistance zone of 1.1055-1.1060 and will remain capped near the significant supply zone between 1.1090-1.1100, the high reached earlier this year in April/May.

If sustained strength is seen beyond the last move, it would confirm a new bullish breakout and allow the EUR/USD pair to continue the recent upward momentum that has been in place for about a month.