EUR/USD Price Analysis: Aims to capture 1.1100 as USD Index eyes more downside

EUR/USD has demonstrated a decent recovery after building a base around 1.1040 as USD Index corrects further.
German income expectations returning to pre-pandemic levels are improving consumer sentiment.
Persistent Eurozone core inflation will create more troubles for the ECB.

The EUR/USD pair has rebounded after building a base around 1.1040 in the early European session. The major currency pair is aiming to capture the critical resistance of 1.1100 for the first time in the past year. The upside bias for the shared currency pair is getting strengthened as the US Dollar index (DXY) is expected to correct further.

The USD Index has reported some losses in the Asian session as investors are worried that approval of a higher debt ceiling proposal would downgrade the long-term rating of the United States.

On the Eurozone front, income expectations returning to pre-pandemic levels due to higher wages and lower energy prices is improving German consumer sentiment, said GfK consumer expert Rolf Buerklas reported by Reuters.

This may create more troubles for the European Central Bank (ECB) as core inflation will continue to remain persistent.

EUR/USD is trading in the critical supply zone placed in a narrow range of 1.1033-1.1074 on a four-hour scale. The Euro has driven the shared currency pair to the supply zone in the Rising Channel chart pattern in which every pullback is capitalized by investors as a buying opportunity.

Upward-sloping 20-period Exponential Moving Average (EMA) at 1.1020 indicates that the short-term trend is extremely solid.

Also, the Relative Strength Index (RSI) (14) is on the verge of shifting into the bullish range of 60.00-80.00.

The major currency pair is in the driving seat and will capture more gains after decisively surpassing the round-level resistance of 1.1100. An occurrence of the same will drive the asset towards a fresh 13-month high at 11.85, which is 31 March 2022 high followed by 28 February 2022 high at 1.1246.

On the flip side, a downside move below April 12 low at 1.0915 will drag the asset toward April 10 low at 1.0837 and April 03 low at 1.0788.