The EUR/USD currency pair maintained a positive stance above 1.0850 in the American session on Wednesday as the US dollar faces challenges amid softer core PCE inflation data. The pair eyes critical support at the Fibonacci 50% retracement level, with potential interim support at 1.0740 and 1.0700. On the upside, resistance levels include 1.0830, 1.0865, and 1.0900.

After touching its lowest level since mid-December below 1.0850, EUR/USD faces a build-up of bearish momentum with the potential for further losses if the 1.0800 support fails. The ECB maintained key rates as expected, with President Lagarde refraining from commenting on policy pivot timing but expecting inflation to ease over 2024.

While the Euro initially held firm post-ECB, it struggled to sustain gains amid a risk-averse market atmosphere, boosting the USD. US stock index futures’ decline early Friday added pressure on the pair.

The US BEA will release December’s PCE Price Index data, with expectations of a muted market reaction after matching third-quarter’s increase. The US GDP expanded at a robust 3.3% annual rate, surpassing analysts’ estimates and supporting the USD.

With safe-haven flows potentially dominating, EUR/USD could face challenges in staging a rebound ahead of the weekend.

Trade Idea:

Monitor key support and resistance levels for potential entry points, considering market sentiment and data releases for directional cues.