EUR/USD outlook: Faces again strong headwinds at pivotal Fibo support

Slobodan Drvenica Windsor Brokers

EUR/USD

EURUSD is pressuring pivotal support at 1.1040 (Fibo 38.2% of 1.0781/1.1200 bull-leg), after facing several rejections at this level recently.

Tuesday’s action is so far holding in a narrow range, following a strong fall in past two days, with near-term bears hesitating here, due to mixed technical signals on 4-hr and daily chart.

Weaker German inflation in August may add to downside pressure, as well as wide expectations for ECB’s 0.25% rate cut on Thursday however, markets will be closely watching results of US Aug inflation report and signals of a size of Fed rate cut later this month, which will impact the dollar.

Break of 1.1040 pivot would risk test of 1.1000 zone (psychological / 50% retracement of 1.0781/1.1200) and possible extension towards 1.0971 (lower 20-d Bollinger band), which may contain dips.

Strong negative momentum on daily chart works in favor of such scenario, as recently formed 100/200DMA Golden cross adds support, along with rising daily Ichimoku cloud.

The second scenario sees repeated rejection at 1.1040 zone and further signals of formation of a base, although, lift and close above Friday’s peak (1.1065) will be required to confirm, and shift focus to the upside.

Res: 1.1065; 1.1091; 1.1107; 1.1155.
Sup: 1.1026; 1.1000; 1.0971; 1.0935.

Interested in EUR/USD technicals? Check out the key levels

1. R3 1.113
2. R2 1.111
3. R1 1.1073
PP 1.1053
1. S1 1.1015
2. S2 1.0996
3. S3 1.0958

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.

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