The pair eases on Wednesday after two-day advance faced strong headwinds from pivotal Fibo barrier at 1.3365 (38.2% of 1.3664/1.3179 descend) reinforced by falling 20 SMA (currently at 1.3375). Recovery leg from 1.3179 (9 Jan low) maintains momentum but overbought conditions suggest that bulls are looking for consolidation before fresh attempts higher. Rising daily cloud supports the action, with cloud top (currently at 1.3317 and reinforced by north-turning 10SMA at 1.3281) expected to ideally contain consolidation. Canada retail sales are in focus today with negative forecasts (Nov retail sales -0.6% f/c vs 0.3% prev / Nov core -0.4% vs 0.0% prev) warning of loonie’s fresh weakness. Thursday’s US senate vote over funding the government to end three-week shutdown, could boost the greenback on positive outcome. Sustained break above 1.3365 Fibo barrier and 20SMA is needed for bullish signal for extension of recovery leg towards 1.3402 (30SMA) and 1.3422 (Fibo 50% of 1.3664/1.3179). On the other side, bearish signal could be expected on break and close below 10SMA that would open way for further retracement of 1.3179/1.3358 recovery leg.
Res: 1.3365; 1.3375; 1.3402; 1.3422
Sup: 1.3312; 1.3281; 1.3231; 1.3206