Bears hold grip ahead of EU inflation report

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.

1.0700; 1.0744; 1.0759; 1.0805
Sup: 1.0652; 1.0631; 1.0600; 1.0551