EURUSD pair dropped to lowest level since early January, extending recent losses amid broader US Dollar strength. Greenback is supported by recent NFP data which reinforced bets that FED will keep rates at a higher level for longer. At the same time, investors digested a dovish cue from policymakers at the European Central Bank despite the body's hawkish stance.
Very strong data from the American labor market for January contradicts the narrative that now the Fed will pass the baton to the ECB, it seems rather that both banks will move in more or less the same direction. Combined with the suspiciously good ISM services index, recent reports also suggest that the US economy will not slow faster than the European one, which has recently been seen as the baseline scenario.
From a technical point of view, the most popular currency pair fell to crucial support at 1.0720, which is marked with previous price reactions, 50 SMA (green line) and lower limit of the 1:1 structure. Break below this area, would pave a way towards next major support at 1.0570, which coincides with 38.2% Fibonacci retracement of the downward wave launched in May 2021. Nevertheless as long as price sits above the aforementioned support zone at 1.0720, another upward impulse towards recent high at 1.10 may still be launched.
EURUSD, D1 interval. Source: xStation5
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