EUR/USD stays on the back foot on Friday and trades at its lowest level in a month below 1.0900. The US Dollar continues to build on Thursday's recovery gains despite improving risk mood and weighs on the pair ahead of consumer sentiment data from the US.

EUR/USD has staged a technical correction early Friday after having touched its weakest level in a month at 1.0900 on Thursday. The modest improvement in market mood in the European morning helps the pair limit its losses and risk perception could continue to drive the action ahead of the weekend. Consequently, the US Dollar (USD) outperformed its rivals despite the disappointing weekly Initial Jobless Claims and lower-than-expected April Producer Price Index (PPI) data.

EUR/USD stays dangerously close to 1.0900 (static level, psychological level, Thursday low). The Relative Strength Index (RSI) indicator on the four-hour chart, however, aligns near 30, suggesting that the pair could stage a correction before the next leg lower.

A four-hour close below 1.0900 should bring in additional sellers and open the door for an extended slide toward 1.0870 (Fibonacci 38.2% retracement of the latest uptrend) and 1.0800 (psychological level, Fibonacci 50% retracement).

On the upside, stiff resistance seems to have formed at 1.0950/1.0960, where the Fibonacci 23.6% retracement level and the 200-period Simple Moving Average (SMA) align. Sellers could move to sidelines if EUR/USD rises below that level and starts using it as support. In that scenario, 1.1000 (100-period SMA, 50-period SMA, psychological level) and 1.1050 (static level) could be seen as next bullish targets.

EURUSD completing daily cycle bearish correction

May 12 2023

Stop Loss -0.32%

Holding time 3hr

1.08891

Entry price

1.08539

Stop loss price