EURUSD has seen some downside pressure this week, bringing the pair to the lower end of the 1.08 handle.
There is a barrier to the upside around 1.0850 and this is the 38.2% retracement of the December bullish run from 1.0520 to 1.1058.
The technical outlook is neutral-to-bearish, given that the market remains below the 200-day moving average and prices are stuck inside the daily Ichimoku cloud. The tenkan-sen has crossed below the kijun-sen line, giving a bearish signal.
Momentum is lacking upside potential, with the RSI dipping back below 50 into bearish territory.
There is important support at the January 5 low of 1.0709, which is near the 61.8% Fibonacci retracement level. A break below this support would strengthen the bearish bias. Below this there is a key psychological level at 1.0500, which if breached, would trigger another downleg and bring a resumption of the downtrend that started from 1.1713 (August 2015 peak).
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