The common currency edged slightly higher amid fresh hawkish hints from the ECB 

Following two days of losses, the euro saw a bounce on Wednesday, deriving support from a weaker dollar. The safe-haven demand for the greenback has abated as risk sentiment looks upbeat across the financial markets. Also, traders may be taking some profit ahead of the US inflation report due on Wednesday.

As EURUSD managed to hold above the 1.1400 figure that triggered local recovery, the pair advanced to intraday highs just below the 1.1450 zone during the European hours. Meanwhile, the USD index struggles to regain the upside momentum and was last seen trading around 95.40, down 0.24% on the day. It looks like the greenback could see deeper losses in the immediate term before attracting demand in anticipation of a major economic report. The immediate significant support for the index now arrives at 95.15, followed by the 95.00 figure. However, it looks like this level would withstand the pressure and push the greenback north eventually. 

The euro was also supported by the latest remarks from European Central Bank’s Governing Council Nagel who said that he would advocate normalizing monetary policy if the inflation picture doesn’t change by March. The economic costs of acting too late are significantly higher than acting early, he added.  

As such, the euro edged slightly higher amid fresh hawkish hints from the central bank. In a broader picture, however, it looks like the common currency will hardly be able to regain the 1.1500 barrier as the divergence between the fed and the ECB will keep capping gains in the euro while supporting the dollar. The EURUSD pair may get back below the descending 100-DMA in the coming days as the USD will regain the upside bias across the market should the upcoming report show another jump in consumer prices. 


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