The Euro edged higher in early European trading on Tuesday, after hitting a 22-month low (1.0806) on Monday.
Upbeat German January industrial production data and a dash of optimism, as clashes in Ukraine, eased and talks between two sides gave some results, paused bears.
Germany’s opposition to US suggestion of banning imports of Russian energy products added to improved near-term sentiment and revived risk appetite that prompted investors to collect some profits from the steep fall in past five days.
Overall picture, however, remains bearish, as Europe is facing big problems with skyrocketing energy prices, with the worst scenario seen on adding Russian energy imports to the list of sanctions that would strongly hurt bloc’s economy, highly dependent on Russian gas and oil, as well as raw materials.
Markets focus today’s EU Q4 GDP data (q/q 0.3% f/c vs 2.2% in Q3) and Thursday’s ECB policy meeting, although not expecting any significant relief from the central bank’s decision in the current circumstances.
Current bounce is likely to be limited (ideally under broken key supports, now solid resistances at 1.1040/00) and provide better levels to re-enter bearish market for possible extension towards target at 1.0635 (2020 pandemic low).
Only sustained break above these levels would ease strong bearish pressure and signal temporary bottom that would allow for stronger correction.
Res: 1.0931; 1.0969; 1.1000; 1.1040.
Sup: 1.0806; 1.0766; 1.0727; 1.0700.
