Fundamental analysis of EUR/USD

The EUR/USD pair has been showing some volatility lately, hitting a high of 1.06986 on Monday. Although the pair has shown some recovery over the past two days, it has seen limited momentum on Tuesday and is trading around 1.06790. This development is approaching the lowest level in the last 6 months due to the ECB's related interest rate decision last week. 

The European Central Bank, trying to fight high inflation, decided to raise interest rates for the 10th consecutive time by 25 basis points, bringing them to a record high of 4%. However, signals from the ECB suggest that the period of policy tightening may be coming to an end. In addition, lower forecasts for CPI and GDP growth for 2024 and 2025 suggest that further interest rate hikes are unlikely. This has held the euro back somewhat, although the weakening dollar has provided some relief. 
The US Dollar Index remains below its highest level since last week as traders remain cautious ahead of an expected central bank event. The Federal Reserve, which wraps up its two-day policy meeting on Wednesday, is expected to maintain its stance. However, the Fed still has the option to raise interest rates by 25 basis points later this year based on positive U.S. data and steady inflation. These factors may allow the Fed to keep interest rates high. 
The key factors that will have a significant impact on the currency pair are inflation expectations and comments from Fed Chairman Jerome Powell. Ahead of this important central bank event, investors will also keep an eye on the final Eurozone CPI data and US housing data. Given the current conditions, bullish sentiment could prevail, but any upward price movement is likely to be short-lived and seen as a potential selling point. 
Technical Analysis and Scenarios:

Price is currently near the middle band (1.06730) and is operating within the upper range. The bands indicate a narrowing of the price range, which usually precedes a breakout in either direction. Stochastic: The 62.3485 value is below the 72.6485 signal level, indicating the possibility of a bearish momentum or a pause in the bullish trend. The MACD value (-0.000920) is below its signal (-0.001493) but the gap is narrowing, indicating a potential bullish momentum if the trend continues. 
Main scenario (SELL)
Recommended entry level: 1.06200.
Take Profit: 1.05700.
Stop Loss: 1.06400. 
Alternative scenario (BUY)
Recommended entry level: 1.07120.
Take Profit: 1.07630.
Stop loss: 1.06850.