The Euro is holding just above one -month low and trading within a narrow range in early Friday, following Thursday’s 0.8% drop, which further weakened near-term structure.
The single currency was hit by fresh strength of the US dollar, sparked by US data well away from expectations, which signaled that the Fed is likely to stay on tightening path longer than anticipated.
Traders are awaiting release of EU Dec inflation (9.7% f/c vs 10.1% in Nov) and US NFP data (Dec 200K f/c vs Nov 263K).
Stronger than expected CPI numbers would offer support for Euro on renewed expectations that the ECB would keep aggressive stance in policy tightening, while above expectations US labor data would add to improved dollar’s sentiment and increase pressure on Euro.
Daily chart studies show strengthening negative momentum and MA’s (10/20/30) in bearish mode that weighs on near-term structure.
Fresh bears pressure initial Fibo support at 1.0498 (23.6% of 0.9730/1.0736), loss of which would accelerate descend and expose key supports at 1.0351/12/02 (Fibo 38.2% / 200DMA top of rising daily cloud).
Converged 10/20DMA’s (1.0610) are on track to create a bear-cross and mark solid resistance, which should cap and keep bears in play.
Res: 1.0536; 1.0563; 1.0610; 1.0660.
Sup: 1.0498; 1.0443; 1.0351; 1.0312.
