EURUSD is consolidating within a narrow range on Thursday morning, following strong rally on Wednesday (up 0.65%), but remains constructive despite Wednesday’s upside rejection and a bull-trap above converged 10/20DMA’s.
The single currency rallied on weaker than expected US May CPI numbers, though the sentiment was cooled by more hawkish than expected remarks from Fed Chair Powell.
The US policymakers were satisfied with positive signals from easing inflation and that the economy remains resilient and heading towards soft landing, however, will remain cautious about the actions on interest rates, which will continue to be data dependent.
Daily chart shows improving conditions after Wednesday’s close above the top of daily cloud generated initial bullish signal, which will look for verification on repeated close above the cloud.
On the other hand, 14-d momentum is still in the negative territory and near-term action weighed by Wednesday’s bull-trap, which is expected to impact the action as long as the price stays below 1.0835/40 zone (converged 10/20 DMA’s/Fibo 61.8% of 1.0915/1.0719), with increased downside risk expected if the price r below 1.0800/1.0785 (psychological/daily cloud top / 200DMA).
US weekly jobless claims and May Producer Price Index will be in focus today as top economic events.
Res: 1.0817; 1.0840; 1.0852; 1.0869.
Sup: 1.0800; 1.0785; 1.0765; 1.0734.
, but remains constructive despite Wednesday’s upside rejection and a bull-trap above converged 10/20DMA’s.){kind=link}