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Denis Sergienko • 2022-07-13

EURUSD bounces off key support ahead of US inflation data

EURUSD bounces off key support ahead of US inflation data

EURUSD bears take a breather after refreshing the 20-year low the previous day. The corrective pullback, however, takes place at the lower end of the nearly four-month-old bearish channel. The rebound also gains support from oversold RSI and that too is ahead of the key US CPI data. Hence, sellers need caution and look for a clear upside break of the 78.6% Fibonacci Expansion (FE) of March-May moves, near 1.0140, to change the bias. Even so, the 61.8% FE and May’s low, respectively around 1.0275 and 1.0350, could challenge the recovery moves before giving control to the buyers. Overall, the bears might stay hopeful until the quote stays inside the stated channel’s resistance line, close to 1.0500.

On the contrary, the lower line of the stated channel, near the 1.000 psychological magnet, appears a tough nut to crack for the EURUSD bears. In a case where the major currency pair stays below the 1.0000 mark, the 100% FE level could act as the last defense for the sellers, a break of which won’t hesitate to drag the quote towards the late 2020 bottom surrounding 0.9860.

Overall, EURUSD bears have had a long ruling and the odds are against them of late, at least technically. However, the fundamentals suggest further downside of the pair and hence buyers need discretion.

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