The Euro rose to 1.09 handle on Monday, inflated by better than expected German Ifo data (May 79.5 vs 74.2 previous and 78.3 f/c).
German business morale improved in May as pandemic restriction eased, signaling the economy takes recovery path following dramatic fall previous months, with GDP data, released earlier today (Q1-2.2% from -0.1% previous and 2.2% f/c) confirming strong negative impact from pandemic lockdown and souring the sentiment.
The pair hit one-week low (1.0870) in early European trading today, in extension of strong fall in past two days, but dips were so far contained by converged 20/30DMA’s and Fibo 61.8% of 1.0774/1.1008 upleg.
Daily techs lack clearer direction signal as MA’s are in mixed setup, bullish momentum is rising and stochastic heading south, but near-term action is weighed by thickening daily cloud (base lays at 1.0918).
If recovery stays capped by cloud, near-term bias would remain with bears and keep in play risk of breaking pivotal supports at 1.0873/64 (20/30DMA’s / Fibo 61.8%) and extending weakness towards key near-term supports at 1.0774/66 (14/7 May low).
Penetration and close within the cloud would ease immediate downside risk and signal further recovery towards key obstacles at 1.10 zone.
Res: 1.0918, 1.0953, 1.0960, 1.1000
Sup: 1.0884, 1.0873, 1.0864, 1.0830
