EUR / USD
The euro rebounded on Monday, reversing more than 50% of Friday’s 0.85% decline and bringing the price to the middle of the range that stretches for a fifth straight week.
New strength partially offsets the negative signal from last week’s bearish close after a weekly Triple Dojis that signaled strong indecision, as bigger bears took an extended break.
The near-term tone should remain neutral as price moves around the converged and sideways 10 and 20 DMAs and holds in a wider range of 1.1380 / 1.1186.
But the bigger picture is bearish and warns that the downtrend is likely to resume after prolonged consolidation, as the pair eventually posted a weekly close below key Fibo support at 1.1290 (61.8% from 1.0635 / 1.2349 ascending).
Fundamentals don’t work in favor of the euro either, as the surge in Omicron cases heightens expectations for further restrictive measures in Europe and undermines risk sentiment, while soft tones from the ECB and more than expected from the Fed hawkish are adding pressure on the single currency.
Larger bears look for new negative signals on repeated weekly close below the 1.1290 Fibo level that would open the way to targets at 1.1040 / 1.1000 (76.4% Fibo / psychological).
The 30 DMA (1.1319) drop provides solid resistance, protecting the pivot above 1.1380 (High End / 38.2% Fibo from 1.1692 / 1.1186), the breakout of which would ward off bears.
Res: 1.1319; 1.1360; 1.1380; 1.1439.
Supper: 1.1234; 1.1204; 1.1186; 1.1100.