EUR/USD slides to 1.1575 area, fresh daily lows ahead of Lagarde/Powell

• EUR/USD struggled to preserve its modest intraday gains to levels just above the 1.1600 mark.
• A combination of factors helped revive the USD demand, which, in turn, exerted some pressure.
• Investors look forward to the US PPI report and Fed Chair Powell’s remarks for a fresh impetus.

The EUR/USD pair edged lower heading into the North American session and dropped to fresh daily lows, around the 1.1575 region in the last hour.

The pair struggled to find acceptance above the 1.1600 round-figure mark and witnessed a modest intraday pullback from three-day tops touched earlier this Tuesday. The EUR/USD pair has now drifted into the negative territory, snapping two days of the winning streak, and was pressured by the emergence of some buying around the US dollar.

Despite the Fed's dovish outlook, expectations that the US central bank would be forced to adopt a more aggressive policy response to contain stubbornly high inflation acted as a tailwind for the USD. The speculations were further fueled by the overnight hawkish comments by several FOMC officials, signalling that the Fed could raise rates by the end of 2022.

Apart from this, the cautious mood around the equity markets further underpinned the greenback's relative safe-haven status against its European counterpart. That said, a fresh leg down in the US Treasury bond yields held the USD bulls from placing aggressive bets and should help limit any deeper losses for the EUR/USD pair, at least for now.

Next on tap is a scheduled speech by the European Central Bank President Christine Lagarde and the release of the US Producer Price Index. This, along with Fed Chair Jerome Powell's remarks at an online conference, might provide some impetus to the EUR/USD pair. The key focus, however, will be on Wednesday's release of the latest US consumer inflation figures.

Technical levels to watch