The Euro regained traction and bounced in early European trading on Monday, retracing the biggest part of post-Fed minutes fall.
Better than expected French PMI data boosted the single currency, while mixed German PMI’s (Manufacturing Feb 47.6 vs 50 f/c / Feb Services 55.1 vs 52.8 f/c) and EU (Feb Manufacturing 49.2 vs 50.3 f/c / Services Feb 52.3 vs 51.5 f/c) slowed recovery
Wednesday’s Doji with long upper shadow signaled strong indecision, as the pair failed to close above cracked pivotal Fibo barrier at 1.1341 (38.2% of 1.1514/1.1234), generating initial signal of possible recovery stall.
Daily 20SMA (1.1363) continues to cap, guarding plethora of barriers provided by 30,55 and 100SMA’s at 1.1372/1.1395.
Daily slow stochastic is reversing at overbought zone border and momentum remains weak, adding to negative signals.
Improved dollar’s sentiment after Fed minutes revived expectations for possible rate hike this year, despite Fed’s strong dovish shift in the previous policy meeting, could also pressure the Euro.
Repeated close below 1.1341 Fibo barrier would generate further bearish signal, however, extension and close below 10SMA (1.1309) is needed to confirm reversal.
Alternative scenario sees sustained break above 1.1341 as initial bullish signal, which would require confirmation on extension above 1.1407 (Fibo 61.8% of 1.1514/1.1234 descend).
Res: 1.1341, 1.1363, 1.1372, 1.1382
Sup: 1.1320, 1.1309, 1.1275, 1.1249