The EUR/USD pair ends a third consecutive week in the red and at its lowest since early January. The US Dollar extended its rally across the FX board on the back of concerns the United States Federal Reserve (Fed) would extend the monetary policy tightening amid inflation easing at a slower-than-anticipated pace.

The EUR/USD pair trades near a weekly low of 1.0612, further below a critical Fibonacci level, the 61.8% Fibonacci retracement of the 2022 yearly slide at 1.0745, and aiming to test the 50% retracement of the same slump at 1.0515.

Technical readings in the weekly chart suggest increased selling interest, although a longer-term decline is not yet clear. The pair continues to retreat from a bearish 100  Simple Moving Average (SMA), which slides below the 200 SMA. Nevertheless, the 20 SMA keeps heading firmly north below the current level. Finally, technical indicators have turned sharply lower, with the Momentum indicator approaching its midline with an almost vertical slope, anticipating more downward pressure on the pair.

The bearish case seems stronger in the daily chart. Technical indicators have extended their slides within negative levels while maintaining their bearish slopes at fresh three-month lows. The 20 SMA, in the meantime, gains downward traction above the current level, providing dynamic resistance at around 1.0795. On a positive note, the 100 SMA has crossed below a flat 200 SMA, both well below the current level.

The aforementioned Fibonacci resistance level at 1.0745 provides resistance since early February, although a clear break above 1.0800 is now needed for bulls to regain confidence. The pair could then extend its gains towards the 1.0900 price zone and change the current bearish picture.

Support can be found at 1.0600 and the 1.0515 50% retracement. If EUR/USD loses the latter, the next relevant level to watch is 1.0410, en route to 1.0280, the 38% retracement of the 2022 slump.

EURUSD hawkish towards the DEMAs before turning lower

Feb 18 2023