The EUR/USD outlook is slightly bullish on the day as the US dollar retreats in the wake of Pelosi’s negative comments about passing the bill.

In Tuesday’s Asian session, EUR/USD traded modestly higher despite cautious optimism. During the trading session, the pair rose sharply to an intraday high of 1.1740, after largely consolidating at the start of the day.

At the time of writing, the EUR/USD pair is trading at 1.1734, up 0.08% on Tuesday.

In response to comments from Pelosi, House Speaker, the USD index (DXY) fell from higher levels to around 92.30.

US House Speaker Nancy Pelosi said she hoped for a $3.5 trillion infrastructure bill but was open to adjustments. However, due to divisions among Democrats in both houses, it appears unlikely that the House and Senate will pass the bill this week.

As investors digest concerns about Chinese real estate giant Evergrande’s defaults and FOMC compliance issues, the yield on the 10-year US benchmark increased by 1.32%.

At a two-day FOMC meeting scheduled for Wednesday, Fed chief Jerome Powell will reduce monthly bond purchases and remind that this is not a sign of an earlier rate hike.

In the meantime, S&P 500 futures are down 1.70% on the day at 4357.

US current account data and building permits offer traders a fresh view on trading as the Euro account remains dry.

EUR/USD Technical Outlook: Volume Supporting Reversal

EUR/USD 4-hour chart outlook

The EUR/USD remains supported by the 1.1700 level. The pair attempted an upside which is still below the key 20-period SMA on the 4-our chart. The pair showed little optimism in the late New York session on Monday. However, the price is consolidating at the moment, and the volume is drying. The price has covered 37%, which shows that the market is still very cautious and awaiting a catalyst. The price stays above the 78.0% retracement level. This may urge the price to hit the 61.8% level at 1.1759 ahead of 1.1787 before hitting the ultimate target of 1.1800.

On the flip side, if the price breaks the 1.1700 level, it may look to test the YTD lows at 1.1660 ahead of the round number at 1.1600.