The pair jumped to three-week high at 110.49 in Asia and holds high levels in early European trading on Tuesday, as dollar rose on optimistic tones from historic US/North Korea summit.
Rising optimism about the final deal for the Korean issue, boosted risk appetite and keep the greenback supported.
Today’s bullish acceleration eventually broke above key 200SMA/Fibo 61.8% barriers which repeatedly capped recent upside attempts. Monday’s rally formed bullish Outside Day pattern which was initial bullish signal.
Daily MA’s turned to full bullish setup and north-heading 14-d momentum is breaking into positive territory, offering further support to dollar.
Close above 200SMA is needed to generate strong bullish signal for continuation of recovery rally from 108.11 (29 May trough).
Bulls eye initial target at 110.62 (Fibo 76.4% of 111.39/108.11 descend), break of which would expose psychological 111.00 barrier and risk extension towards key barriers at 111.36/39 (FE 100% of the wave C from 109.19/21 May peak).
Broken 200SMA now acts as initial support at 110.16, followed by converged 5/20SMA’s at 109.86, which should keep the downside protected.
Res: 110.49, 110.62, 111.00, 111.36
Sup: 110.16, 109.86, 109.75, 109.44
