EURUSD retraces its YTD low and is under pressure from a number of causes.

The EURUSD pair appears to have entered a bearish consolidation phase. Fluctuating in a small trading zone around 1.0465, or a new YTD low hit during the Asian session on Tuesday.

Bets that further ECB rate rises are on the horizon continue to weigh on the EURUSD.

The common currency is under threat from evidence of the end of high. Inflation in the Eurozone and weakening in Germany, Europe’s economic engine. The largest economy in the Eurozone.

This, in turn, has fueled speculation that further rate rises by the European Central Bank (ECB) may be off the table for the time being. The markets do not believe that the ECB’s next action will be a rate decrease. Aside from that, the EURUSD pair is still being weighed down by the underlying strong positive sentiment around the US Dollar (USD).

The Fed’s hawkish stance drives the USD to an 11-month high and adds to the decline.

The USD Index (DXY), which measures the value of the US dollar. Against a basket of currencies, reaches its highest level since November 2022. Bolstered by the Federal Reserve’s (Fed) higher-for-longer interest rate narrative. The hawkish prognosis was bolstered by Cleveland Fed President Loretta Mester. Who stated that the US central bank will most likely need to raise rates again this year. Mester noted that the Fed will maintain rates tight in order to keep inflation low. And that higher rates are required to ensure that the disinflationary process continues.

This continues to be supportive of additional rises in US Treasury bond rates. Which, along with a generally softer risk tone, is seen benefiting the safe-haven USD while acting as a headwind for the EURUSD pair. However, the Relative Strength Index (RSI) on the daily chart is indicating oversold circumstances. Which may deter traders from initiating new bearish bets around the major.

As a result, traders should wait for any near-term stabilization or a moderate recovery before preparing for an extension of the recent well-established downtrend.

Nonetheless, the aforementioned essential context indicates. That the course of The EURUSD pair has the least resistance on the downside. And any major bounce is more likely to be sold into. In the lack of any market-moving Eurozone macro data and a bank holiday in Germany. The USD price dynamics will continue to play a vital role in affecting the major.

Later in the early North American session. Traders will look for short-term chances with the publication of the US JOLTS Job Openings.