The Euro (EUR) extended upside movement against the US Dollar (USD) on Thursday, increasing the price of EUR/USD to more than 1.2750, the fourth straight gain after the steep 1000 pips fall over the past few weeks. The long term bias however remains bearish due to Lower Low on the daily chart.
As of this writing, the pair is being traded around 1.2762. A hurdle can be seen near 1.2780, the 23.6% fib level ahead of 1.2954, the 38.2% fib level and then 1.3095, the 50% fib level as demonstrated in the following chart.
On the downside, the pair is expected to find a support around 1.2621, the intraday low of yesterday ahead of 1.2500, the low of the recent downside move as well as psychological number. The pair is expected to take some retracement before resuming the downside dips.
The European Central Bank (ECB) head Mario Draghi is due to speak today during the US session. Investors will be eyeing his remarks very closely to gauge the future monetary policy outlook of the shared economy. The recent monetary policy statement was lacking the details about measures that could be considered to save the recession-hit economy; the lack of details was considered positive and consequently spurred bullish momentum in the price of EURUSD.
The US Central Bank yesterday released the minutes from the FOMC Monetary Policy Meeting which took place a few days back. The minutes showed overall dovish sentiment among the policymakers as they looked concerned about the global slowdown and strong US Dollar.
Keeping in view the overall technical and fundamental outlook, buying the pair on dips appears to be a good strategy in short to medium term as long as the 1.2500 support area is intact.