EURUSD stabilizes ahead of press conference

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EURUSD , CHARTS AND ANALYSIS
- ECB edges further towards a June rate cut.
- Will President Lagarde begin signaling further rate cuts?

The ECB maintained its policy levers unchanged, as expected. However, they stated that if their assessment of inflation and monetary policy transmission improves, they may consider reducing current restrictions. This follows their previous mention of June as a potential meeting for a policy decision, increasing the likelihood of a cut on June 6th.

Financial markets continue to price in a 25 basis point at the June meeting and have recently increased the probability of an additional cut at the July 18th meeting. It may well be that the ECB cuts twice before the Fed makes its first move.

EURUSD fell sharply yesterday, due to post-CPI US dollar strength, leaving the Euro as the next driver of any move. Initial support is seen around 1.0698, a double-low made in early February, before the 1.0635 – May 31st swing-low – and 1.0610 – Fibonacci retracement – come into play.

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On the daily chart, EURUSD there are technical conditions that fully support the possibility of a bearish price with the main trend formed from price channel (a) and maintaining price activity below the EMA21 level.
While EUR/USD's decline may temporarily be limited by the support confluence of the 0.236% Fibonacci retracement and the lower edge of the price channel (a) along with the 1.06367 horizontal support, it still has plenty of room to fall. Technical price. A new bearish cycle could be opened once the lower edge of price channel (a) is broken below with the target level then around 1.05232 in the short term.
Upward corrections, as long as they do not break the technical points 1.06854 – 1.07234, EUR/USD still has a short-term decline prospect, and these are also considered targets for short-term correction recovery.

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The driving force for recovery was the selling pressure on the USD when the DXY index dropped to 105.78. However, the upside prospects for EURUSD may be quite limited as the market is expecting that the ECB will cut interest rates in June, putting pressure on the Euro.