EURUSD is in a quiet mode in European session on Thursday, awaiting fresh direction signals from the ECB’s decisions on today’s policy meeting.
Near-term action remains at familiar levels, near the mid-point of a narrow range which extends into sixth consecutive day.
Larger bears from new 2023 high (1.1275) are pausing above Fibo support at 1.0695 (76.4% retracement of 1.0516/1.1275) which so far contained several attacks, but the upside remains protected by falling 10DMA (currently at 1.0738), keeping the pair in extended consolidation.
Technical studies on daily chart are bearish, with 14-d momentum holding in negative territory and Tenkan-sen / Kijun-sen in increasingly bearish configuration, adding to downside risk.
Bears need firm break of 1.0695 Fibo support to signal continuation of larger downtrend and expose next pivotal levels at 1.0635/11 (2023 low / Fibo 38.2% of 0.9535/1.1275 rally).
Conversely, lift above 10DMA would ease immediate downside risk, however sustained break above 200DMA (1.0827) is needed to sideline bears and open way for stronger recovery.
The European Central Bank is holding its policy meeting today and facing a difficult task in decision whether to raise its key interest to new record high in continuous fight with inflation, or to stay on hold as bloc’s economic conditions are deteriorating.
Eurozone inflation is still 2 ½ times above 2% target, with darkened outlook for 2024 adding to argument for a rate hike, as policymakers fear that inflation may get stuck at higher levels for a longer period.
On the other hand, weak economic indicators send strong warning that negative impact from high interest rates could push the economy into recession.
Res: 1.0768; 1.0796; 1.0827; 1.0896.
Sup: 1.0695; 1.0667; 1.0635; 1.0611.
