EUR/USD Price Analysis: Struggles to make it through descending channel hurdle, FOMC awaited

• EUR/USD has been struggling to gain any meaningful traction and remains confined in a range.
• A softer tone surrounding the USD offered support, though recession fears capped the upside.
• Sustained strength beyond the post-ECB high is needed to support prospects for further gains.

The EUR/USD pair extended its sideways consolidative price move on Tuesday and remained confined in a familiar trading band heading into the European session. The pair was last seen hovering around the 1.0220-1.0225 region, nearly unchanged for the day.

The US dollar languished near its lowest level since July 5, which, in turn, was seen as a key factor that offered some support to the EUR/USD pair. That said, recession fears continued weighing on the shared currency and acted as a headwind for spot prices.

From a technical perspective, the EUR/USD pair was seen flirting with the top boundary of a short-term descending channel. This is followed by the post-ECB swing high, around the 1.0275-1.0280 region, which should now act as a key pivotal point for short-term traders.

Sustained strength beyond the said hurdles would set the stage for an extension of the recent recovery move from the 0.9950 region, or the lowest level since December 2002 touched earlier this month. The EUR/USD pair might then aim to surpass the 1.0300 round-figure mark.

The momentum has the potential to lift spot prices towards the 1.0350 horizontal support breakpoint, now turned resistance. The EUR/USD pair could eventually reclaim the 1.0400 round-figure mark, though might struggle to gain any follow-through traction.

On the flip side, the overnight low, around the 1.0180-1.0175 region, now seems to protect the immediate downside ahead of the 1.0130-1.0125 zone and the 1.0100 mark. A convincing break below the latter would suggest that the recent corrective bounce has run out of steam.

The subsequent downfall would make the EUR/USD pair vulnerable and expose the parity mark. The downward trajectory could further get extended and force spot prices to challenge the YTD low, around the 0.9950 region.

EUR/USD daily chart

Key levels to watch