Larger bulls likely to regain traction after a shallow pullback
The Euro dips below 1.10 support on Friday, extending pullback from new 2023 high (1.1095) into second consecutive day.
Stronger dollar on Friday morning pressured the single currency, along with weak EU / German GDP data for Q1, though markets remain cautious ahead of today’s key event – US PCE data, closely watched by Fed.
The pullback was so far seen as a healthy correction of a larger uptrend, as daily studies are bullish, with dips expected to find firm ground at 1.0960 zone (rising 20DMA / Fibo 23.6% of 1.0516/1.1095 rally) which would offer better levels to re-join bullish market for fresh push higher.
Fundamentals are likely to be a key market driver on Friday, with core US PCE at / below forecasts to signal that inflation is losing traction,
This scenario will be supportive for Euro as weaker inflation would make the dollar less attractive for traders.
On the other hand, stronger than expected PCE figures would signal that inflationary pressure is rising again and lift the dollar.
Caution on break below 1.0960 zone as this would increase downside risk of testing pivotal supports at 1.0909 (Apr 17 trough) and 1.0874 (Fibo 38.2% of 1.0516/1.1095), loss of which would signal deeper correction.
Res: 1.1015; 1.1039; 1.1075; 1.1095
Sup: 1.0960; 1.0909; 1.0874; 1.0831