The Euro slips in early Friday, reducing hopes for stronger recovery, as fresh weakness offsets signal from reversal pattern that formed on daily chart. On Wednesday’s long-tailed Doji and Thursday’s long bullish candle.
Traders remain very short Euro, as dollar holds firm tone, inflated by the most recent strong US inflation and retail sales data, which set scope for earlier than expected rate hike and increase pressure on Fed.
On the other side, rising number of Covid-19 infections in the Europe and continuous drop in car sales, may add to ECB’s stance of keeping record low rates.
Technical studies on daily chart show fresh bearish momentum and MA’s in full bearish setup that maintains negative bias.
Bears are on track for renewed attack at key Fibo support at 1.1290 (61.8% of 1.0635/1.2349) which was dented on Wednesday but providing headwinds.
Firm break here would open way for fresh bearish acceleration towards a minor daily higher base at 1.1168 which guards more significant supports at 1.1040/1.1000 (Fibo 76.4% of 1.0635/1.2349/psychological).
The pair is on track for the second consecutive strong weekly fall that adds to negative signals, with the single currency expected to remain under increased pressure unless fundamentals drastically improve.
Caution on failure to register a weekly close below 1.1290 pivot that would signal prolonged consolidation, however, bears are expected to remain intact while consolidation stays below 1.1430/40 zone (daily Tenkan-sen/Fibo 38.2% of 1.1582/1.1263 bear-leg).
Res: 1.1373, 1.1436, 1.1477, 1.1500.
Sup: 1.1290, 1.1263, 1.1200, 1.1168.
