Bears are on hold but stronger recovery so far looks unlikely
Signals of recovery on Wednesday’s first bullish close after eleven straight days in red, are fading as the pair’s action in Asia/early Europe on Thursday is shaped in long-legged Doji.
Larger bears took a breather on Thursday, but it so far looks unlikely that stronger recovery action can develop.
Bears registered weekly close below Fibo support at 1.0863 (76.4% of 1.0340/1.2555) and filled a gap from April 2017, adding to negative signals and exposing next target at 1.0570 (10 Apr 2017 low).
Fundamentals also work against the single currency as Eurozone’s economic outlook remains weak while solid US data point to growth.
Also, the ECB remains dovish while the Fed showed cautious optimism, despite both central banks stayed on hold.
The dollar continues to rise on safe-haven buying over coronavirus fears and positive view of Fed that keeps the single currency under pressure.
Dead cat bounce is for now seen as likely scenario, with upticks into barriers at 1.0854/63 (10DMA / broken Fibo 76.4%) seen as positioning for fresh weakness.
Caution on break and close above 1.0854/63 that would temporarily sideline bears and allow for stronger bounce.
Res: 1.0815; 1.0837; 1.0854; 1.0863
Sup: 1.0778; 1.0752; 1.0700; 1.0682