EURUSD is pressuring pivotal support at 1.1040 (Fibo 38.2% of 1.0781/1.1200 bull-leg), after facing several rejections at this level recently.
Tuesday’s action is so far holding in a narrow range, following a strong fall in past two days, with near-term bears hesitating here, due to mixed technical signals on 4-hr and daily chart.
Weaker German inflation in August may add to downside pressure, as well as wide expectations for ECB’s 0.25% rate cut on Thursday however, markets will be closely watching results of US Aug inflation report and signals of a size of Fed rate cut later this month, which will impact the dollar.
Break of 1.1040 pivot would risk test of 1.1000 zone (psychological / 50% retracement of 1.0781/1.1200) and possible extension towards 1.0971 (lower 20-d Bollinger band), which may contain dips.
Strong negative momentum on daily chart works in favor of such scenario, as recently formed 100/200DMA Golden cross adds support, along with rising daily Ichimoku cloud.
The second scenario sees repeated rejection at 1.1040 zone and further signals of formation of a base, although, lift and close above Friday’s peak (1.1065) will be required to confirm, and shift focus to the upside.
Res: 1.1065; 1.1091; 1.1107; 1.1155.
Sup: 1.1026; 1.1000; 1.0971; 1.0935.
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