Euro under intense selling pressure

The EUR/USD pair comes under intense selling pressure on Wednesday and drops to a one-week low during the first half of the European session. Spot prices, however, show some resilience below the 1.0800 mark and rebound a few pips in the last hour, though any meaningful recovery seems elusive in the wake of a goodish pickup in the US Dollar (USD) demand. Investors now seem convinced that the Federal Reserve (Fed) will wait until the June policy meeting before cutting interest rates. This, along with a turnaround in the global risk sentiment, benefits the safe-haven Greenback.

That said, a fresh leg down in the US Treasury bond yields might hold back the USD bulls from placing aggressive bets. This, along with reduced bets for a more rapid cut in borrowing costs by the European Central Bank (ECB), could lend support to the shared currency and limit the downside for the EUR/USD pair. Investors might also prefer to move to the sidelines ahead of the crucial inflation figures from the Eurozone and the United States (US). The flash CPI estimates from Germany, France and Spain are due for release on Thursday ahead of the US Personal Consumption Expenditures (PCE) Price Index.

This will be followed by the Eurozone inflation data on Friday, which will drive the shared currency, which will play a key role in driving the Euro and providing some impetus to the EUR/USD pair ahead of the ECB meeting on March 7. In the meantime, traders on Wednesday will take cues from the Prelim US Q4 GDP print, which, along with speeches by influential FOMC members, should contribute to producing short-term opportunities around the EUR/USD pair.