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EUR/USD appears to be on track to test the March-high (1.2476) as it carves a fresh series of higher highs & lows, but the near-term rebound in the exchange rate may face a key test over the coming days as the pair remains stuck within the range from earlier this year.

Fresh remarks from European Central Bank (ECB) board member Ewald Nowotny grabbed market attention as the Governing Council official stated that ‘now it is time for a gradual normalization of monetary policy,’ but the remarks quickly refuted, with the central bank arguing that the comments ‘don’t represent the view of the Governing Council.’ Nevertheless, the statement suggests a growing number of ECB officials will change their tune over the coming months as the quantitative easing (QE) program is set to expire in September, but President Mario Draghi and Co. may merely attempt to buy more time at the next meeting on April 26 as inflation continues to run below target.

In turn, EUR/USD may continue to consolidate over the near-term, with the 2018-range in focus amid the failed attempts to close above the 1.2540 (38.2% expansion) region. Interested in having a broader discussion on current market themes? Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups!

EUR/USD Daily Chart

EUR/USD Daily Chart

Keep in mind, the longer-term outlook for EUR/USD remains constructive as both price and the Relative Strength Index (RSI) preserve the bullish formations carried over from late last year, and the broader shift in euro-dollar behavior may continue to take shape over the coming months as the ECB gradually moves away from its easing-cycle.

In turn, a break/close above the Fibonacci overlap around 1.2370 (61.8% expansion) to 1.2430 (50% expansion) raises the risk for a run at the March-high (1.2476), but the near-term outlook remains mired by the 2018 range, with resistance coming in around 1.2540 (38.2% expansion).

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--- Written by David Song, Currency Analyst

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