The EURUSD currency pair is currently trading at 0.25% higher as the market corrects the initial overnight selloff that saw the pair trade as allow as 1.07883, a five-week low, as investors reacted to the surprising oil supply cut by the Organization of the Petroleum Exporting Countries, including Russia (OPEC+) on Sunday.
The OPEC+ announcement that the organization will be cutting oil supply by 1.16 million barrels per day, led by Russia and Saudi Arabia, spooked the market in the morning trading session sending the bond yields and the US dollar higher as investors before a market correction saw a retracement as investors look to the manufacturing PMI data later.
The 4H chart shows that the currency pair, also known as the “Fiber”, is currently correcting higher after a failure to substantially move below the 23.60% Fibonacci level following the impulse-driven overnight selloff. With the week ahead, investors will be wary not to push the Fiber too high ahead of the Manufacturing PMIs in the US and the Eurozone later today.
The bulls could be confident in the continuation of the current rally. Should the PMI data continue to improve sentiment, then the bulls could be optimistic in testing the initial level of interest at 1.09304, a previous ceiling for the bulls. A sustained breakthrough above the resistance level could bring the 2nd of February 2023 high of 1.09664 into play. Strong US data could help the Fiber reverse the current course and re-test the 23.60% Fibonacci level. The breakthrough below the 1.08316 support level would bring the support level at 1.07310 and the golden ratio into play.
With this week’s Nonfarm Payrolls (NFP) firmly in investors’ focus ahead of the manufacturing PMIs, the currency could be range bound for the week. Thus, bulls could be looking for an opportunity if the price action sustainably breaks through 1.09664, and the bears could be looking at the breakthrough below 1.07310 for confirmation of bearish sentiment.
Sources: TradingView, Reuters, CNBC.
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