The cross dipped on Tuesday as sterling rallied on better than expected UK data and euro came under pressure on rise of Italian bond yields after new PM promised to bring radical changes to the country. Fresh weakness nearly fully reversed yesterday’s recovery and pressures low of past two days at 0.8727, which marks the lower boundary of three-day congestion, capped by descending 100SMA (0.8787). The downside is reinforced by the base of daily cloud and clear break lower would generate firmer bearish signal as the price holds in the range within daily cloud since 21 May and break below cloud would expose key near-term support at 0.8697 (29/30May higher base). Today’s fall brings daily MA’s back to full bearish configuration, which increase pressure as momentum turned south. Converged 10/55SMA’s offer solid resistance at 0.8749/56 zone which is expected to cap and keep bears in play.
Res: 0.8756; 0.8768; 0.8787; 0.8809
Sup: 0.8718; 0.8697; 0.8680; 0.8672
