EUR/USD eases from 50-DMA amid resurgent dollar demand, US inflation eyed

• EUR/USD’s upside breakout challenges the 50-DMA roadblock at 1.1181.
• The US dollar attempts a bounce amid broad risk-aversion, recovery in yields.
• Bullish RSI suggests any pullback could be short-lived, focus on US/EU inflation.

EUR/USD is feeling the pull of gravity, as the US dollar recovers lost territory across the board amid a risk-off market picture.

Chinese business activity returns to a contraction in March, underlining fears about China’s economic slump while the nation confronts the current covid epidemic.

Further, Ukraine’s President Volodymyr Zelenskyy’s assertions that the Ukrainian military is preparing for a fresh Russian attack in the eastern area of the nation further contributed to the dour atmosphere, restoring the dollar’s safe-haven appeal.

Meanwhile, a rebound in the US Treasury rates throughout the curve also assists the resumed rise in the greenback, restricting EUR/USD’s gains.

On the euro side of the equation, fears about increasing inflation drove the euro area periphery rates over the ceiling, underpinning the surge in EUR/USD a day earlier. As for Thursday’s trade so far, the primary currency pair is taking cues from the dollar’s price movement and the broader market attitude.

Although the damage in the spot might be restricted by the 5 percent collapse in oil prices on rumours of the US pondering a huge crude reserves release. Meanwhile, traders will look forward to the German Retail Sales and US PCE Inflation coming later this Thursday for additional trading chances. Friday’s Eurozone Preliminary inflation figures and the US NFP report will also hold the key.

EUR/USD: Technical forecast
As noticed on the daily chart, EUR/USD is retreating after finding heavy resistance at the downward-sloping 50-Daily Moving Average (SMA) around 1.1181.

The decline in the 14-day Relative Strength Index (RSI) is supporting the pullback in the price. Although the bullish potential remains intact, as the leading indicator is maintaining well above the midline. Acceptance over the latter would put the bearish 100-DMA at 1.1250 at jeopardy.

If bulls meet rejection at the 50-DMA, then a new downswing towards Wednesday’s low of 1.1082 might be in the offing. Ahead of it the 1.1100 round number might be questioned.

EUR/USD: Daily chart

EUR/USD: Additional levels to consider