EUR/USD Outlook: Near-Term Risk Shifts Lower after Thick Daily Cloud Capped Recovery

The Euro turned to red on Friday after recovery on Wed/Thu was capped by the base of thick daily cloud (spanned between 1.0566 and 1.0767)) and dollar returns to strength after hawkish Fed and BoJ remaining on hold.

The action remains heavily weighed by daily cloud and bearish studies on daily chart, with Thursday’s bull-trap on Fibo barrier (50% of 1.0786/1.0358) and 10DMA (1.0572) adds to negative signals.

Near-term action looks for repeated close below falling 10DMA to confirm negative stance, with extension through 5DMA (1.0466) to further weakens the structure and increase risk of fresh attack at key supports at 1.0349 (2022 low) and 1.0340 (2017 low), loss of which would open way for stronger bearish acceleration.

Alternative scenario would require rebound and close within daily cloud to ease immediate downside risk.

Res: 1.0566; 1.0591; 1.0623; 1.0638.
Sup: 1.0493; 1.0466; 1.0380; 1.0349.