The Euro is standing at the front foot on Tuesday and extends recovery from last Friday’s low at 1.1669.
Comments on Monday from ECB’s hawk Lautenschlaeger who called to start winding down asset-buying program, inflated the single currency with fresh boost in early European trading on Tuesday, coming from upbeat German data. Germany’s exports and imports rose significantly in August while trade surplus widened to 21.6 billion Euros in August vs 19.3 billion surplus in July and beating forecast for 20 billion Euros.
Markets are also focusing the situation in Spain as Catalonian leaders may declare independence from Spain today, as there were no signs of compromise between secessionist leaders and Spanish government.
Leading European countries, Germany and France put pressure on secessionists, expressing their support to Spain’s unity.
The Euro may come under increased pressure if Catalonian leader decide to declare independence, as government in Madrid would respond and likely suspend Catalan autonomy which would further raise tensions and uncertainty. Such scenario could easily drive the single currency through strong supports at 1.1600 zone.
Alternatively, political solution would lower tensions and offer fresh support to the single currency for bullish acceleration through initial barriers at 1.1800/30.
From the technical point of view, EURUSD’s near-term studies are bullishly aligned and supportive for further recovery.
On the daily chart, bullish signal was generated on lift above 10 SMA/daily Tenkan-sen at 1.1750 zone, after completion of falling wedge pattern signaled reversal.
This could signal limited upside action as daily techs are negative and plethora of MA barriers that lay above, weighs on near-term action.
Initial resistance lies at 1.1808 (Fibo 38.2% of 1.2033/1.1669 downleg) followed by 1.1832 (29 Sep lower top/converged 20/55SMA in attempt to form bear-cross).
Extended upticks would face strong headwinds and should be ideally capped here as underlying bear-trend from 1.2092 peak is still intact.
Res: 1.1787, 1.1808, 1.1832, 1.1866
Sup: 1.1755, 1.1720, 1.1662, 1.1605
