The Euro remains at the back foot in early Wednesday and holding around 1.1175 (Tuesday’s low) after failure to sustain break above 1.1200 barrier pulled the price lower.
Tuesday’s close in red that also formed bearish Outside Day, could be seen as early signal of correction, along with slow stochastic which reversed from overbought territory on daily chart.
Stronger dollar in Asia dragged the single currency lower, offsetting positive impact of strong German Ifo data and EU PMI on Tuesday.
Further negative signal could be expected on break below Monday’s low at 1.1161, with loss of pivotal 1.1100 support (Fibo 38.2% of 1.0839/1.1268 upleg, reinforced by rising 10SMA) needed to confirm pullback, which may extend towards next strong support at 1.1000 (Fibo 61.8%, reinforced by rising 20SMA).
However, overall structure remains bullish and sees scope for fresh upside after correction.
Focus today in on the speech of ECB President Draghi (due at 12:45 GMT) which may provide more information about timing for tapering of QE program and hints about exiting current ultra-low rate policy.
Any comments from Draghi that markets will understand as hawkish would be supportive for Euro for renewed attempts above 1.1200 and extension towards next target at 1.1313 (Fibo 76.4% of 1.1614/1.0340.
Conversely, more dovish from Draghi would accelerate pullback from Tuesday’s fresh multi-month high at 1.1268.
Res: 1.1200, 1.1249, 1.1268, 1.1300
Sup: 1.1161, 1.1100, 1.1053, 1.1000
