The Euro fell around hundred pips and hit the lowest since 29 Apr after German top court ruled the Bundesbank must stop buying government bonds under the ECB’s stimulus program, unless the central bank can prove the purchases are needed.
The court added that their decision did not apply to the ECB’s latest, 750 billion euros worth pandemic fighting program, as the central bank amazed nearly three trillion euros of bonds in attempts to support the economy since 2015.
The pair holds firmly in red for the second day and fresh bearish extension confirms reversal from 1.1017 recovery high, where recovery stalled and bull-trap pattern has formed.
With over 61.8% of 1.0727/1.1017 recovery leg being retraced so far, near-term focus turns lower.
Daily techs are back to full bearish setup and supporting negative scenario. Bears eye targets at 1.0810 (27/28 Apr higher base) and 1.0795 (Fibo 76.4%) violation of which would risk full retracement of 1.0727/1.1017 upleg). Broken 10/20DMA’s (1.0861/82 respectively) reverted to resistance and expected to cap and keep fresh bears intact.
Res: 1.0861, 1.0882, 1.0906, 1.0925
Sup: 1.0825, 1.0810, 1.0795, 1.0768
