The Euro is consolidating under fresh high at 1.1776 posted in Asia, in extension of Wednesday’s strong post-Fed rally. The pair is trading at levels last seen in Jan 2015 and looks for clear break above pivotal 1.1735 barrier (Fibo 38.2% of 1.3992/1.0340 descend) to trigger fresh acceleration higher.
The single currency is driven higher by weak dollar which fell further after wording of Fed’s statement sent signals that the US central bank might not hike interest rates again this year.
On the other side, technical studies are strongly overbought on larger timeframes, suggesting that bulls might take a breather. Bearish divergence on daily chart slow stochastic is supporting the notion.
The pair faced headwinds ahead of next strong barrier at 1.1795 (weekly 200SMA), which may temporarily cap the action.
Today’s close in red would be seen as initial negative signal. First good supports lay at 1.1620 zone (daily higher base, reinforced by rising 10SMA) with key near-term support laying at 1.1525/00 (Fibo 38.2% of the upleg from 1.1188 to 1.1776, reinforced by rising 20SMA) which is expected to contain extended dips.
Otherwise, break and close above 1.1795 pivot would signal bullish continuation and open was towards psychological 1.2000 resistance (also monthly cloud base).
Res: 1.1776, 1.1795, 1.1848, 1.1896
Sup: 1.1681, 1.1620, 1.1583, 1.1525
