EUR/USD maintained its position in the 1.0650s on Thursday; however, recovery shows signs of fading after the bounce from the 1.06 April low. The currency pair's current stance teeters between the realms of correction and reversal, accentuated by a robust bullish recovery of 80 pips within a mere 36-hour window, keeping bullish sentiments afloat.

The momentum in EUR/USD's rebound received added impetus from European Central Bank President Christine Lagarde's remarks delivered during a speech in Washington late on Wednesday. Lagarde emphasized the ongoing battle against inflation, asserting, "The game is not over," despite acknowledging the sluggish growth in Europe compared to the US, citing "timid signs of recovery."

 However, Lagarde's stance slightly diverges from some of her ECB counterparts, who have expressed contentment with the inflation trajectory, injecting a hint of uncertainty regarding the anticipated ECB interest rate cuts in June, which could potentially extend the tenure of higher interest rates, thereby bolstering the Euro's appeal to foreign investors.

 In an interview with Bloomberg, ECB Governing Council member Klaas Knot echoed confidence in the market's pricing of ECB rate cuts, expressing optimism regarding the disinflation process. Similarly, ECB policymaker Joachim Nagel foresees a gradual decline in key rates post-June, while acknowledging the possibility of intermittent inflation rebounds in Germany throughout the year.

 Federal Reserve Chairman Jerome Powell's recent remarks hinted at prolonged high interest rates in response to sluggish progress in inflation. The Fed's Beige Book affirmed the prevailing sentiment of stagnation in inflation, juxtaposed with slightly upbeat indicators on economic growth and employment.

 Market sentiment, as gauged by federal funds futures, indicates a meager 16% probability of a rate cut in June a significant deviation from the previous weeks' probabilities exceeding 70%. However, the likelihood of a rate cut by September hovers around 70%, reflecting a delay in rate cut expectations rather than complete abandonment of such an outcome.

 Despite the buoyant momentum observed during the short-term recovery, the Relative Strength Index (RSI) has shifted out of oversold territory, signaling a buy opportunity. Nevertheless, prudent investors remain cautious, recognizing the persistent downward pressure of the intermediate-term downtrend.

 The presence of resistance near previous swing lows around 1.0700 poses a formidable barrier to the ongoing recovery, potentially triggering a reversal and driving the exchange rate lower. Nevertheless, even in the face of bearish resistance, this level is poised to offer technical support, underscoring the resilience of bullish sentiments.