EUR/USD is extending the drop towards 1.1300 after the ECB is debating over a potential increase in the APP at its meeting next week. The US dollar rebounds amid a cautious mood. Omicron, US-China woes keep investors on the edge.
From a technical perspective, the pair's inability to capitalize on the overnight positive move and the emergence of a fresh selling on Thursday warrants some caution for bullish traders. That said, it will still be prudent to wait for some follow-through selling back below the 1.1300 mark before positioning for the resumption of the recent bearish trend. The pair might then accelerate the fall towards intermediate support near the 1.1260-55 region before dropping to test weekly swing low, around the 1.1230-25 region.
This is followed by the YTD low, or levels just below the 1.1200 mark touched set on November 25, which if broken decisively will be seen as a fresh trigger for bearish traders. The subsequent downfall has the potential to drag the pair to the 1.1145 support area en-route the 1.1100 round-figure mark.
On the flip side, momentum beyond mid-1.1300s is likely to confront some resistance near the 1.1380-85 area, marking the 38.2% Fibonacci level of the 1.1692-1.1186 downfall. A sustained breakthrough, leading to a subsequent strength above the 1.1400 mark could push the pair further towards the 50% Fibo. level, around the 1.1440 region.
The material has been provided by InstaForex Company - www.instaforex.com