EURUSD remains at the front foot in early Thursday’s trading and holding under new three-week high (Wednesday’s spike at 1.0816).
Bulls probe again through cracked daily Kijun-sen (1.0791) and look for retest of daily cloud top (1.0808).
Cloud top was dented on Wednesday but subsequent pullback from new high and daily close well below cloud top, generate initial signal of bull-trap formation and warn of possible stall.
Adding to negative signals to the single currency was strong drop in German industrial orders in May that contributes to weak picture in manufacturing sector, which remains in contraction for two years.
Technical picture has further improved on daily chart, as positive momentum is rising and MA turned to almost full bullish setup however, sustained break above pivotal 1.0800 resistance zone (converged 100/200DMA’s / psychological / daily cloud top) is required to confirm bullish stance and signal continuation of recovery leg from 1.0666 higher base.
Otherwise, the downside is expected to remain vulnerable, despite prevailing bullish bias above cloud base (1.0771) and strong rally on Wednesday.
Loss of cloud base to generate initial negative signal, with drop below daily Tenkan-sen (1.0741), to confirm reversal and expose 1.0666 base for retest.
Markets are expected to operate with lower volumes today, as the US is shut for Independence Day, however, UK election, as top event today, may increase volatility.
Res: 1.0808; 1.0820; 1.0852; 1.0889.
Sup: 1.0771; 1.0741; 1.0723; 1.0700.
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