EUR/USD rose briefly above the 38.2% Fibo of the 1.0787-0.9952 decline on its way to a 10-session high on Wednesday but then turned negative after the EU raised fresh gas-supply worries, hobbling the euro's outlook a day before a key ECB meeting.

European Commission President Ursula von der Leyen said a full cut-off of Russian gas flows to Europe is a likely scenario nFWN2Z12YG, weighing on risk sentiment with equities ESv1 erasing overnight gains, the safe-haven dollar and yen rallying and EUR/JPY turning negative after striking an 11-session high.

Euro zone interest rates fell sharply and December 2023 Euribor FEIZ3 rallied as investors reduced ECB terminal-rate projections while German 2-year yields DE2YT=RR dropped, which helped widen 2-year German-U.S.
spreads US2DE2=RR.

The ECB meeting will be critical.
Debate over a 25 or 50 basis point hike and details of the ECB's anti-fragmentation tool will be on the docket nL8N2Z01UW.
Any disappointment could send the euro sharply lower.

Technicals highlight downside risks.
Daily RSI diverged on Wednesday's high, the 38.2% Fibo helped to stall the rally and monthly RSI is falling.

EUR/USD longs will need risk-on to return and a euro-friendly ECB for old support near 1.0350 to get tested.

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