EUR/USD Forecast: Rejected near 50% Fibo. level; set to resume the previous bearish trend?
|The EUR/USD pair witnessed a sharp intraday slide on Thursday and erased all of the previous session's gains to six-week tops. With investors looking past an ultra-dovish FOMC, a goodish US Dollar rebound from the lowest level since early February turned out to be one of the key factors that prompted some aggressive long-unwinding trade around the major. The USD uptick was further supported by a larger than expected fall in the US initial weekly jobless claims and stronger Philly Fed manufacturing index, which jumped to 13.7 in March from the previous month's reading of -4.1.
The pair dropped to an intraday low level of 1.1343 but managed to recover over 30-pips, albeit ended deep in the red to snap four consecutive days of winning streak. The pair stabilized near the 1.1375 region during the Asian session on Friday as market participants now look forward to the release of flash Euro-zone PMI prints for some fresh impetus. From the US, existing home sales data might influence the USD price dynamics and further contribute towards producing some short-term trading opportunities on the last trading day of the week.
From a technical perspective, the pair's inability to capitalize on the post-FOMC bullish break through six-month-old descending trend-line and a failure near 50% Fibonacci retracement level of the 1.0341-1.2556 up-move now seems to suggest that the recent positive momentum might have already run out of steam. A sustained weakness back below the 1.1335-30 horizontal zone will further reinforce the expectations and prompt some fresh technical selling, dragging the pair back towards challenging the 1.1300 handle. A follow-through selling has the potential to extend the downfall further towards 1.1260-55 intermediate support en-route the 1.1200 round figure mark.
On the flip side, the 1.1400 handle now seems to act as an immediate resistance but the key barrier remains near the 50% Fibonacci level, around mid-1.1400s, above which the pair seems all set to surpass the very important 200-day SMA resistance, around the 1.1480 region, and aim towards reclaiming the key 1.1500 psychological mark.
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