EUR/USD pair failed to sustain above 1.13 levels on Friday and fell to 1.1253 levels, before minor bout of profit taking ensured the spot closed the week at 1.1265 levels. Euro found bids around the confluence of key Fibo levels - 1.1257 (61.8% of 1.1714-1.0517) + 1.1253 (100% Fibo of 1.0517-1.1060-1.0711) in early Asia today, but the subsequent bullish momentum ran out of steam at a high of 1.1285 levels.
Oil driven risk-off could offer support to EUR
The common currency may find support in the oil driven risk-off in the equities. Both oil benchmarks have edged lower, given their overbought status. The resulting risk-off in the equity markets could help EUR move back to near daily highs.
Moreover, traders could look through German Bundesbank’s monthly report if the risk-off mood strengthens. Bundesbank report is likely to reiterate bank’s stance against ECB’s negative rates strategy, but may not help EUR gain as the bank’s anti-low rate/negative rate stance is well known to the markets.
Technicals – Eyes 5-DMA support below 1.1253
Euro’s failure to sustain above 1.1257 (61.8% of 1.1714-1.0517) + 1.1253 (100% Fibo of 1.0517-1.1060-1.0711) would open doors for a drop to hourly 100-MA of 1.12 and 5-DMA at 1.12.
The hourly RSI has turned bearish and that adds credence to a possibility of a drop to 1.12 if bulls fail to keep support at 1.1253 intact.
Conversely, a rebound from 1.1257 would shift risk in favor of the pair taking out daily high of 1.1284 and rising to 1.1337-1.1342 levels.
Bullish forces would gain traction opening doors for a spike through 1.14 handle (127.2% Fibo exp) if resistance at 1.1376 (Feb 11 high).
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