EUR/USD Forecast: 1.1765-60 support holds the key for bulls, Eurozone PMIs eyed for fresh impetus

The EUR/USD pair witnessed some selling on Thursday and snapped four consecutive days of the winning streak amid resurgent US dollar demand. The global risk sentiment dampened on the back of fading hopes about a pre-election US fiscal package, which, in turn, provided a modest lift to the greenback's safe-haven status.

Meanwhile, House of Representatives Speaker Nancy Pelosi said that stimulus talks were on a good path and they will soon be ready to put pen to paper on the stimulus bill. Pelosi further added that the aid bill could be passed in the House before the election day. Investors, however, seemed unconvinced that the bill could actually pass through the Senate amid strong opposition from Republicans over a bigger stimulus bill.

On the other hand, the shared currency was weighed down by disappointing Eurozone economic data. In fact, the German Gfk Consumer Climate for November slipped to -3.1 from the previous month's reading of -1.7, missing consensus estimates pointing to a reading of -2.8%. Moreover, the Eurozone Consumer Confidence Index also fell short of market expectations and dropped to -15.5 from -13.9 previous. This comes on the back of the second wave of coronavirus infections, which strengthened the case for additional monetary easing by the European Central Bank and took its toll on the common currency.

Data released from the US showed that Initial Weekly Jobless Claims fell to 787K during the week ended October 16, well below the 860K anticipated. Adding to this, the previous week's reading was also revised lower to 842K from 898K reported earlier. Separately, the US Existing Home Sales recorded a stronger-than-expected growth of 9.4% in September and remained supportive of the strong bid tone surrounding the USD.

The pair extended its retracement from five-week tops touched earlier this week and remained depressed through the Asian session on Friday. Market participants now look forward to the release of the flash version of the Eurozone PMI prints, which will play a key role in driving the sentiment surrounding the shared currency. Later during the early North American session, the release of the flash US Manufacturing/Services PMI will also be looked upon for some trading impetus on the last day of the week.

Short-term technical outlook

From a technical perspective, the corrective slide dragged the pair towards an important confluence resistance breakpoint, now turned support near the 1.1790-85 region. Any subsequent weakness is more likely to find decent support near the 1.1765-60 horizontal zone. Failure to defend the latter might negate any near-term bullish bias and turn the pair vulnerable to accelerate the fall back towards the 1.1700 mark. The downward trajectory could further get extended towards testing September monthly swing lows, around the 1.1615-10 region.

On the flip side, attempted positive moves might now confront a stiff resistance near the 1.1855-60 region. The mentioned barrier marks the 61.8% Fibonacci level of the 1.2011-1.1612 downfall. A sustained move beyond the 1.1880-90 congestion zone will be seen as a fresh trigger for bullish traders and set the stage for an extension of the recent appreciating move, possibly towards reclaiming the key 1.2000 psychological mark.