EUR/USD outlook: Bears hold grip ahead of EU inflation report
EUR/USD
The Euro remains at the back foot in early Thursday despite Wednesday’s strong downside rejection and signal of bear-trap formation on daily chart, as well as constructive signals from daily chart (fading bearish momentum/north-heading stochastic / RSI approaching oversold territory).
The action stays below broken psychological level at 1.07 for the second day that adds to negative near-term outlook for renewed attempt through cracked Fibo support at 1.0652 (76.4% of 1.0516/1.1095), clear break of which is needed to signal bearish continuation.
At the upside, 1.07 offers immediate resistance, followed by strong barriers at 1.0737/43 double-Fibo resistance zone (broken 61.8% of 1.0516/1.1095 / 23.6% of 1.1095/1.0635 / falling 10DMA) which should cap extended upticks to keep near-term bias with bears.
Markets await release of the Eurozone inflation report for May, with prevailing optimistic mood after inflation in Germany dropped to the lowest in more than a year.
EU’s harmonized core CPI is expected to dip to 7.2% in May from 7.3% in April, which would add to signals that bloc’s underlying inflation is eventually starting to ease and lower bets for stronger rate hikes by the ECB.
Res: 1.0700; 1.0744; 1.0759; 1.0805.
Sup: 1.0652; 1.0631; 1.0600; 1.0551.
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Author
Slobodan Drvenica
Windsor Brokers
Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.
