The Euro dips further on Wednesday following a strong upside rejection on Tuesday that left a bearish daily candle with long upper shadow.
Fresh weakness was helped by a significant drop in German retail sales (Apr -5.5% vs -2% f/c), while increased optimism about accelerating US economic recovery (investors expect upbeat results from US ADP/NFP labor reports; increased activity in US services sector and further fall of weekly jobless claims) would prompt the Fed for earlier than expected policy changes that would provide strong support to the US dollar and accelerate liquidations of larger Euro longs.
Fresh bears eye pivotal support at 1.2133 (Feb 23.6% of 1.1704/1.2266/May 28 spike low), with a clear break here to generate initial reversal signal and expose key levels at 1.2051/39 (Fibo 38.2%/100DMA) which guard psychological 1.20 support.
Broken 10DMA / bull-trendline (1.2207) reverted to solid resistance and today’s close below this levels would keep in play fresh bearish bias.
Caution on the rebound and close above 10DMA / trendline that would sideline downside threats and signal another false break lower.
Res: 1.2207; 1.2226; 1.2254; 1.2266.
Sup: 1.2163; 1.2133; 1.2102; 1.2051.
