The Euro is taking a breather after steep three-day rally which peaked at 1.2296, the highest in more than three years. Recent strong rally was supported by broadly weaker dollar and additionally boosted by hopes the ECB could further trim its monetary stimulus. The pair is holding within consolidative range today, with overbought daily studies keeping in play risk of deeper correction. Firmer bearish signals are required to spark correction and expose initial supports at 1.2206 (Fibo 23.6% of 1.1915/1.2296 upleg) and 1.2187 (yesterday’s low). Next significant support lies at 1.2150 (Fibo 38.2%) and corrective action should ideally find footstep here to keep intact pivotal supports at 1.2100 zone (former tops/daily Tenkan-sen). Overall structure is firmly bullish and favors continuation of broader uptrend after consolidative/corrective phase. Sustained break above 1.2300 barrier is needed to signal bullish continuation. German inflation numbers for December were released today and came in line with expectations, causing no significant moves in the market. Focus turns towards EU CPI data, due tomorrow, for fresh signals.
Res: 1.2296, 1.2350, 1.2400, 1.2450
Sup: 1.2215, 1.2206, 1.2187, 1.2150
