EUR/USD – Bears Encounter Significant Resistance at Key Support Zone

The Euro is consolidating early Thursday after a sharp decline on Wednesday, where the pair fell 0.5%, marking the largest daily loss since April 30, driven by renewed risk aversion.

Bears have found support just above the strong 1.0790/80 zone (the top of the thick daily cloud, the 200DMA, and the 38.2% Fibonacci retracement of the 1.0601/1.0895 rally) and are now seeking new directional cues.

The near-term action is weighed down by Wednesday’s large bearish candle, the formation of a failure swing pattern, and a bearish cross between the 10DMA and 20DMA.

However, daily chart momentum remains positive, and the larger uptrend from 1.0601 is intact as long as the price action stays above the 200DMA, Fibonacci support, and the daily cloud top. A strong bounce from these levels would indicate a healthy correction.

Fundamentals continue to favor the dollar, as expectations for a Fed rate cut are diminishing due to persistent inflation. Markets are now focusing on key economic events: the release of the US revised Q1 GDP and weekly jobless claims on Thursday, and the PCE report, the Fed’s preferred inflation measure, on Friday, which will provide fresh signals.

Expect a strong bearish signal on a firm break below the 1.0780 zone, while a rise above initial resistance at 1.0816 (20DMA) would ease immediate downside pressure. An extension and close above the 10DMA (1.0838) would provide a stronger bullish signal.

Res: 1.0816; 1.0825; 1.0838; 1.0860
Sup: 1.0780; 1.0748; 1.0724; 1.0700