EUR/USD outlook: Initial reversal signal is developing on daily chart

Slobodan Drvenica Windsor Brokers

EUR/USD

The Euro is holding a bit firmer footing in early European trading on Thursday after dollar failed to benefit more from recent hawkish comments from Fed officials.

Fresh strength might be generating an initial reversal signal after yesterday’s action ended in inverted hammer candle and oversold stochastic turned north.

However, this is still insufficient and more action at the upside will be needed to verify bullish signal, as momentum indicator on daily chart is still in the negative territory.

Fresh recovery pressures initial Fibo barrier at 1.0754 (23.6% of 1.1032/1.0669 bear-leg), but acceleration through 1.0800/20 zone (Fibo 38.2% / 10DMA) is needed to ease downside pressure and open way for stronger recovery.

Otherwise, limited upticks would likely mark a correction ahead of continuation of a bear-leg from 1.1032 (Feb 2 peak).

Lower than expected figures of German harmonized CPI in January contributed to Euro’s fresh strength, but markets look for more signals.

European Commission meets today and will release its economic growth forecast, while weekly jobless claims are the key release in US.

Traders await stronger signals from the US inflation report, due next Tuesday.

Res: 1.0781; 1.0807; 1.0819; 1.0850.
Sup: 1.0679; 1.0590; 1.0573; 1.0483.

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

1. R3 1.0798
2. R2 1.0779
3. R1 1.0747
PP 1.0728
1. S1 1.0695
2. S2 1.0677
3. S3 1.0644

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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