EUR/USD struggles to lure buyers and is undermined by a combination of factors.
Reduced Fed rate cut bets continue to lend support to the USD and cap the upside.
Political uncertainty in Europe is further holding back the Euro bulls on the defensive.
The EUR/USD pair edges higher during the Asian session on Tuesday and currently trades around the 1.0765-1.0770 area, albeit lacks strong follow-through buying. Moreover, the fundamental backdrop and the technical setup warrant some caution before positioning for an extension of the previous day's modest rebound from the 1.0735-1.0730 region, or a one-month low.
The US Dollar (USD) remains well supported by growing acceptance that the Federal Reserve (Fed) might keep interest rates higher for longer, bolstered by the stronger-than-expected US jobs data released on Friday. Adding to this, French President Emmanuel Macron's decision to call snap elections later this month increased political uncertainty in the Eurozone's second-biggest economy, which might continue to undermine the shared currency. This, in turn, favors bearish traders and validates the near-term negative outlook for the EUR/USD pair.
From a technical perspective, the post-NFP fall below the 100-day Simple Moving Average (SMA) near the 1.0800 mark and a subsequent breakdown through the 200-day SMA adds credence to the negative outlook amid bearish oscillators on the daily chart. Hence, any further move up might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly near the 1.0800 round figure. The said handle should act as a pivotal point, which if cleared decisively might prompt a short-covering rally towards the 1.0865-1.0870 supply zone en route to the 1.0900 mark.
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