The Euro consolidates above new nine-week low at 1.1378, posted after Wednesday’s 0.7% fall, which generated strong bearish signal on break and close below 1.1432 base. The single currency remains biased lower and sees risk of further weakness, with consolidative / corrective action to precede fresh downside, as sideways-moving momentum and oversold slow stochastic support the notion. Broken base at 1.1432, previous strong support, now marks solid resistance, which should ideally cap consolidation, however, stronger upticks cannot be ruled out. Falling 10SMA (1.1491) and broken Fibo 61.8% of 1.1300/1.1815 (1.1497) are expected to limit extended recovery, before bears regain control and move towards key short-term supports at 1.1317 (weekly 200SMA) and 1.1300 (15 Aug low) ECB’s policy meeting is the key event for Euro today and expected to further increase current high volatility. The central bank is expected to keep its ultra-low rates unchanged, with comments from the President Draghi about positive outlook for inflationary pressures and extended bond-buying program, as the ECB needs more evidence to start tightening, expected to be barely changed from its recent post-policy meetings press conferences. Markets will be closely watching for Draghi’s possible remarks about recent fall in stock markets and signals that EU’s economic momentum is slowing.
Res: 1.1420, 1.1432, 1.1476, 1.1497
Sup: 1.1378, 1.1366, 1.1317, 1.1300
