The EUR/USD pair continues to gravitate around the 1.0500 area on Thursday as investors take the back seat ahead of the Federal Reserve and the European Central Bank policy decisions next week.
At the time of writing, the EUR/USD pair is trading at 1.0520, up 0.1% on the day, extending its recovery from weekly lows around 1.0440.
Growth data from the Eurozone showed resilience in the region on Wednesday. Still, the euro failed to capitalize on it amid renewed energy concerns as the Russian President said the possibility of a nuclear war was increasing.
At the same time, the market focus remains on next week's Fed and ECB decisions. The Federal Reserve will announce its policy rate on Wednesday, and market participants continue to lean toward a less aggressive hike of 50 basis points.
The ECB will do the same on Thursday, and expectations also point to a 50 bps increase in its main rates, although Lagarde & Co. could "surprise" with a 75 bps move.
From a technical perspective, the EUR/USD short-term bias remains bullish as the price stands above its main moving averages on the daily chart, although indicators show dwindling momentum. Despite this week's correction, the RSI stands near overbought territory, while the MACD sits barely above its mid-line.
The EUR/USD pair needs to reclaim the 1.0600 area – where a 1 ½-year-old descending trend line stands – to pick up the pace and move towards 1.0700. On the flip side, short-term supports line up at 1.0400, 20-day SMA, and 1.0350, 200-day SMA.
