EUR/USD: the Fed prevents a return below 1.10, will a break below this threshold be confirmed today?

Despite its reluctance to break below the psychological threshold of 1.10, the EUR/USD maintained a bearish profile this morning.

Indeed, the pair had tested the psychological high of 1.10 on Wednesday, with a low of 1.0991, but was soon back above it.

Risk aversion related to the Corona virus continued to dominate trading, with the number of deaths and illnesses continuing to rise, prompting traders to prefer the safe haven (dollars), which is considered a more speculative currency.

However, after bottoming at 1.0991 in this environment, the EUR/USD managed to rebound. The pair benefited from a bout of USD weakness after the U.S. Pending Home Sales, which proved to be disastrous for the last month of 2019, falling -5.0% versus an expected gain of 0.5%.

The Fed meeting that took place in the evening confirmed the USD's weakness. Indeed, the market seems to have considered Powell's intervention as slightly dovish, which helped the EUR not weaken further below 1.10. The market seems to have considered Powell's intervention as slightly dovish.

However, the Euro's failure to drop below 1.10 does not guarantee its ability to rebound.

Indeed, the rally that followed yesterday's daily lows stopped at 1.1019, and was therefore not enough to challenge the fundamental bearish bias.

A break above the 100-hour moving average currently at 1.1019 would already be a more interesting signal, although other key obstacles lie just above it, with the 100-day moving average at 1.1064, and then the psychological threshold of 1.11, and the 200-day moving average at around 1.1129.

If, on the other hand, sellers are asserting their dominance and the pair falls below the critical psychological threshold of 1.10, then the late November low of 1.0979 will be the next potential support, ahead of 1.0949, 1.0925, 1.09, and last year's low at 1.0879.

Finally, it should be noted that the economic calendar will potentially remain a key factor in the Euro's evolution today, as investors will be keeping a close eye on the preliminary Q4 2019 US GDP figures. Simultaneously, we will also be watching the weekly US Unemployment Claims.

Currently, the EUR/USD is trading at 1.1019 on the forex.

Hourly EUR/USD chart