EUR/USD retraces to its 200-hour moving average before easing lower
The pair is keeping lower after the dollar eased on gains to start the session, as sellers defended a test of the 200-hour MA (blue line) @ 1.0900.
Over the past two days, the dollar has been keeping firmer and that has seen the pair fall from around 1.0990 to current levels around 1.0870-80. With price action keeping below the key hourly moving averages as well, the near-term bias is more bearish.
However, there is some near-term support around 1.0850-60 that is limiting losses for now.
From a technical perspective, that is the key area to watch for sellers to try and drive further downside momentum in the pair back towards 1.0800 next.
The risk for any downside move rests at the 200-hour MA before the 100-hour MA (red line) steps in at around 1.0933. The latter was what limited the retracement overnight.
As for a fundamental view, the dollar continues to show hints of demand but the market is leaning towards being more risk-on today after the softer tone yesterday.
If you put both together, that hints at a more mixed picture today and that means the market will have to eventually settle on one side or the other at the end of the day.
On the one hand, continued economic worries is one reason to keep a more pessimistic outlook but on the other hand, central bank and government measures continue to tell investors not to worry because however bad it is, they will be willing to step in.
It is hard to balance out those arguments for now, but the technical picture will offer a good guide on which way the market is leaning.
For EUR/USD, the 200-hour MA and support around 1.0850-60 will be the two key lines in the sand in trying to get a handle of the current market situation.
