The Euro pressures last Friday’s low at 1.1601 in early European trading on Wednesday, in extension of strong fall on Tuesday after more hawkish than expected congressional testimony of Fed Chairman Powell.
Powell favored central bank’s plan for gradual rate increase as financial conditions are supportive for further growth, inflation is close to central bank’s target and labor sector remains strong.
The single currency already stood at the back foot on Tuesday, following repeated failure to clearly penetrate thick daily cloud and accelerated lower after Powell’s upbeat remarks.
Fresh weakness cracked bull-trendline which connects lows at 1.1527 and 1.1601 (at 1.1638) and looks for attack at 1.1601 pivot, break of which is needed to complete failure swing pattern on daily chart and signal further weakness.
Daily indicators (momentum and slow stochastic) are heading south and MA’s (10/20/30) are now in bearish setup and supporting fresh bears. Rising negative sentiment is expected to add to bearish pressure.
Broken 20SMA caps today’s action and marks solid resistance at 1.1665 (reinforced by the base of thick hourly cloud) which should ideally limit upside attempts, as profit-taking and hesitation at strong 1.1601 support may push the price higher.
Only sustained break above 1.17 handle (daily Tenkan-sen) would sideline immediate bears and would risk renewed attack at daily cloud base.
EU’s inflation data are key event for Euro today (annualized figure is expected to stay unchanged at 2% in June, while forecast for monthly increase by 0.1% is well below previous month’s 0.5% release).
Res: 1.1665, 1.1700, 1.1722, 1.1740
Sup: 1.1625, 1.1601, 1.1589, 1.1558
