EUR/USD Forecast: Sustained move beyond 1.10 mark will confirm a reversal

Following the previous session's intraday pullback, the EUR/USD pair caught some fresh bids on Wednesday and built on its recent recovery move from multi-year lows. Persistent offered bias around the US dollar, all against the backdrop of the Fed's unlimited QE, was seen as one of the key factors driving the pair higher. Investors further took comfort from the passage of a massive $2 trillion US stimulus package to offset the economic impact from the coronavirus pandemic and continued dumping the greenback.

Meanwhile, the positive momentum seemed rather unaffected by awful German IFO Business Climate, which slumped to 86.1 in February – the lowest value since July 2009. Adding to this, IFO President Clemens Fuest noted in a statement that the German economy could shrink by as much as 20% in 2020, albeit did little to dampen the positive mood surrounding the major. Across the pond, the mixed US Durable Goods Orders data failed to provide any respite to the USD bulls or hinder the pair's intraday move up.

The continued gaining traction for the fifth consecutive session on Thursday and climbed further beyond the 1.0900 round-figure mark, hitting one-week tops during the Asian session. It, however, remains to be seen if bulls are able to capitalize on the momentum or the pair's meets with some fresh supply at higher levels. The fact that the coronavirus continues spreading exponentially, in Europe and the US, concerns over the economic fallout/imminent global recession might extend some support to the greenback's status as the global reserve currency and keep a lid on any runaway rally for the major.

On Thursday, the European Central Bank is scheduled to release the monthly Economic Bulletin. The key focus, however, will be on the US initial weekly jobless claims for the week ended March 20. Economists are looking for claims to soar to 1,000K as compared to the previous week's reading of 281K. The US economic docket also features the release of the final GDP print, which is expected to confirm that the economic growth stood at 2.1% annualized pace during the final quarter of 2019 and might fail to provide any meaningful impetus.

Short-term technical outlook

From a technical perspective, the overnight sustained move above the 23.6% Fibonacci level of the 1.1497-1.0636 recent slump supports prospects for additional gains. However, any subsequent positive move is likely to confront a stiff resistance near the 1.0965-70 region, marking 38.2% Fibo. level. This is closely followed by 50-day SMA, just ahead of the key 1.10 psychological mark, which should now act as a key pivotal point for short-term traders. Above the mentioned barrier, the pair is likely to accelerate the momentum further towards 50% Fibo. level, around the 1.1060-65 region.

On the flip side, immediate support is now pegged near the 1.0875 horizontal zone ahead of the 1.0840 level (23.6% Fibo.). Failure to defend the said support levels might offset the near-term positive outlook, rather prompt some technical selling and drag the pair back towards the 1.0800 round-figure mark. Some follow-through selling might now turn the pair vulnerable to resume its prior bearish trend and head back towards challenging sub-1.0700 levels with some intermediate support near the overnight swing low, around the 1.0760 region.