EUR/USD Forecast: Bulls need to make it through 61.8% Fibo. amid pandemic crisis
|- EUR/USD reversed an early dip and climbed to near two-week tops on Friday.
- Persistent USD selling bias was seen as a key factor driving the pair higher.
- Coronavirus crisis extended some support to the USD’s safe-haven status.
The EUR/USD pair had some good two-way moves on Friday and the intraday volatility was sponsored by the US dollar price dynamics. The pair initially witnessed a modest pullback and dropped to intraday lows, around mid-1.0900s amid a mild USD recovery. The downtick, however, turned out to be short-lived, rather was quickly bought into on the back of some fresh selling around the greenback. Against the backdrop of the Fed's unlimited QE, the latest optimism over a massive $2.2 trillion US economic stimulus package continued prompting some USD selling on the last trading day of the week.
The bearish pressure aggravated further following the disappointing release of the US Michigan Consumer Sentiment Index. The gauge fell to 89.1 in March from 101 previous and marked its second-largest monthly decline amid concerns over the economic fallout from the coronavirus pandemic. The fact that the United States has the highest number of new coronavirus cases in the world, investors are increasingly worried about its impact on the economy and continued dumping the buck. This eventually pushed the pair further beyond the very important 200-day SMA, and the 1.1100 round-figure mark, to its highest level since March 17.
As coronavirus lockdowns tightened across the world, a prolonged period of uncertainty extended some support to the greenback's perceived safe-haven status and helped ease the recent bearish pressure. The pair witnessed a modest pullback during the Asian session on Monday and for now, seems to have snapped six consecutive days of the winning streak. Currently hovering around the 200-DMA, below the 1.1100 round-figure mark, developments surrounding the coronavirus saga might continue to play a key role in influencing the pair's momentum amid absent relevant market-moving economic releases on the first day of a new trading week.
Short-term technical outlook
From a technical perspective, the pair witnessed a modest pullback from the vicinity of the 61.8% Fibonacci of the 1.1497-1.0636 recent slump. However, any subsequent slide below the 1.1065 region (50% Fibo.) might still be seen as a buying opportunity and help limit further downside, near the key 1.10 psychological mark. On the flip side, the 1.1100 round-figure mark now seems to act as immediate resistance and is followed by the 1.1145-50 supply zone. A convincing break through the mentioned barrier, leading to a subsequent strength beyond the 1.1165 region (61.8% Fibo.) will reaffirm the near-term bullish bias and lift the pair beyond the 1.1200 mark, towards testing its next hurdle near the 1.1225 supply zone.
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