EUR/USD Roadmap from 1.06 to 1.07

The EUR/USD cross struggles to find a direction on Friday, oscillating in a narrow range just below 1.0700. US consumer confidence, according to the UoM index, fell below expectations, weakening to 60.4 in November from 63.8 in October. Wall Street operates in positive territory after Thursday's decline, influencing the demand for US dollars. The Relative Strength Index (RSI) on the 4-hour chart retreated below 50, while EUR/USD dropped below the mid-point of the ascending regression channel, indicating a bearish tilt in the short-term outlook.

If EUR/USD fails to stabilize above 1.0680 (mid-point of the ascending channel), sellers' interest could persist. In this scenario, the 50-period Simple Moving Average (SMA) acts as provisional support at 1.0660 before 1.0640 (Fibonacci 38.2% retracement level of the latest downtrend) and 1.0620 (lower limit of the ascending channel, 100-period SMA).

On the upside, resistances are located at 1.0700 (Fibonacci 50% retracement), 1.0730 (upper limit of the ascending channel), and 1.0750 (Fibonacci 61.8% retracement). EUR/USD came under bearish pressure and declined below 1.0700 in the late American session on Thursday. The pair stays relatively quiet early Friday, while the technical outlook indicates a slightly bearish bias.

During participation in a monetary policy panel organized by the International Monetary Fund on Thursday, Federal Reserve Chairman Jerome Powell reiterated the data-dependent approach. "We are making decisions meeting by meeting, based on the totality of the incoming data and their implications for the outlook for economic activity and inflation," Powell stated.

However, Powell noted that they are not confident that they have achieved a 'sufficiently restrictive' policy stance to bring inflation down to 2% over time. This comment provided a boost to the US Dollar (USD) and caused EUR/USD to turn south.

Nevertheless, the CME Group FedWatch Tool shows that markets are still pricing in a 90% probability of the Fed leaving the policy rate unchanged in December. The market positioning suggests that there is more room for USD strength if other policymakers adopt a similar language. Additionally, EUR/USD presents a possibility of retracement to the 62% Fibonacci level as it currently sits between the 0.38% and 0.5% levels, touching the price of 1.062 before rebounding to the 1.07 level. Let me know what you think. Happy trading to everyone from Nicola, the CEO of Forex48 Trading Academy.