EUR/USD Price Forecast: Extra losses seen on a breach of 1.2040
- EUR/USD regains the smile following Wednesday’s pullback.
- The mid-1.2000s have so far emerged as decent support.
- Investors’ focus remains on US inflation and higher yields.
EUR/USD manages to regain some composure following Wednesday’s marked pullback, with decent contention so far emerging in the 1.2050 region, area coincident with a Fibo level of the November-January rally.
Higher-than-expected US inflation figures in April fuelled the upside in US yields and propped up the noticeable advance in the greenback on Wednesday, motivating investors to leave behind the post-Payrolls adjustment.
However, the perseverant dovish message from the Federal Reserve plus the relentless recovery in the Old Continent coupled with the firmer pace of the vaccination campaign still remains a source of potential upside in EUR/USD for the time being.
Short-term Outlook
The continuation of the leg lower is expected to meet initial and interim support around the 100-day SMA, today at 1.2042. A clear breach of this contention area is seen putting the psychological support at 1.2000 back on the radar ahead of the so far May low at 1.1985 (May 5). On the upside, bulls need to regain monthly peaks in the 1.2180/90 band to allow for the resumption of the uptrend and a potential visit to the 1.2200 mark and beyond.
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Author
Pablo Piovano
FXStreet
Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.
