EUR/USD clings to recovery gains below 1.0400 ahead of German inflation

EUR/USD has staged a rebound during the Asian trading hours but lost its traction near 1.0400. Following Monday’s volatile action, the technical outlook suggests that the pair is likely to gather bullish momentum once it stabilizes above 1.0450.

Despite the risk-averse market environment, the US Dollar struggled to find demand in the first half of the day on Monday and EUR/USD reached its strongest level in five months near 1.0500. With Wall Street’s main indexes suffering heavy losses after the opening bell, however, the pair came under bearish pressure and ended up closing the day in negative territory. Hawkish comments from Fed officials also provided a short-term boost to the US Dollar.  

Early Tuesday, the positive shift witnessed in risk mood seems to be helping EUR/USD cling to modest daily gains. Renewed optimism about China continuing to move away from the zero-Covid policy after Global Times commentator Hu Xijun tweeted that China may “walk out of the shadow of COVID-19 sooner than expected,” allowed risk flows to return to markets.

TRADE SUGGESTION- BUY AT 1.03923, TAKE PROFIT AT 1.04776, SL AT 1.03265