EUR/USD REBOUNDS IN TECHNICAL BOUNCE FROM OVERSOLD LOWS

• EUR/USD is rebounding from intraday-chart oversold lows. 
• Eurozone inflation data on Wednesday could impact interest-rate expectations and the exchange rate. 
• The recovery could rise a little further but the short-term trend remains bearish.   

EUR/USD is edging higher on Wednesday, making it back into the 1.0770s and extending the previous day’s rebound from six-week lows. It is still too early to say whether the move is corrective in nature or a reversal of the dominant short-term downtrend – but probably the former. 

The pair has been bearish since the second week of March, mainly on the back of shifting expectations regarding the outlook for interest rates in Europe and America. In the US, borrowing costs are expected to remain higher for longer, supporting the US Dollar (USD), since higher interest rates attract more foreign capital inflows. This view is unlikely to change much.