FxAnalysis

Since being rejected from the yearly highs near the 1.2100 mark in late January, the short-term picture for EUR/USD has been steadily deteriorating.

Sticky domestic inflation, together with a Reserve Bank of Australia (RBA) that still shows little appetite to soften its hawkish stance, continues to offer a supportive backdrop for the Australian Dollar (AUD).

Gold prices are in consolidation mode on Wednesday, with XAU/USD trading around $5,170 with a modest downward bias.

Europe could be facing a familiar economic challenge: inflation caused by imports. The rise of energy costs is enough to revive an uncomfortable question for policymakers: Is the ghost of stagflation coming back?

The EUR/USD pair traded with a soft tone throughout the first half of the day, holding within familiar levels. The Middle East war continues, with back-and-forth attacks and the US Dollar (USD) benefiting from persistent uncertainty.

The bullish retracement has created a bearish head and shoulders chart pattern in line with the dominant trend, which will complete below $1.1600.