The EURUSD pair is expected to build on the previous day’s late comeback from the 1.0515 range, or its lowest level since January. And gain some positive traction during Thursday’s Asian session.
Forecasts that the ECB would raise interest rates by 50 basis points also add to the intraday rise.
It is worth mentioning that investors had begun to doubt. If the ECB will stick to its commitment for another big rate hike after last week’s collapse of two mid-size US banks – Silicon Valley Bank and Signature Bank. However, a source close to the ECB’s rate-setting Governing Council said there was no fundamental change in the outlook. As the Eurozone economy is picking up strength and inflation is expected to remain high for years.
This turns out to be another factor acting as a tailwind for the EURUSD pair amid some repositioning trade. Ahead of the key central bank event risk – the highly-anticipated ECB policy decision due later this Thursday.
EURUSD Technical Outlook
Technically, the overnight drop – the worst daily loss in over six months – and this week’s unsuccessful attempt to extend the rally above the 50-day Simple Moving Average (SMA). Might be interpreted as a new signal for bears. Spot prices, on the other hand, showed some resistance below the 100-day simple moving average on Wednesday.
This suggests waiting for any follow-through selling below the overnight swing low, at 1.0515. Before preparing for any further depreciation.
The EURUSD pair may likely accelerate its decline towards the 1.0460-1.0455 support level. Which represents the 38.2% Fibonacci retracement level of the surge from September 2022 to February 2023. A strong break below the latter should pave the way for a drop below the 1.0400 round number on the path to the 50% Fibo.
Any additional rebound beyond the 1.0600 level, on the other hand, appears to face significant resistance in the 1.0675-1.0680 zone, or the 23.6% Fibo. level, ahead of the 50-day SMA. Which is now around 1.0725. This is followed by the monthly top. Which, if forcefully cleared. Will nullify any near-term bearish bias and allow the EUR/USD pair to retake the 1.0800 round figure.
The momentum may be extended further towards the 1.0860-1.0865 static barrier on the way to 1.0900. and the next important stumbling block at 1.0925-1.0930.
