The Euro holds in red for the second day and broke below important supports at 1.1848/26 ( daily H&S pattern neckline / Fibo 61.8% of 1.1662/1.2092 upleg), signaling further downside.
Fresh weakness was triggered by politics with completion of reversal pattern, seen as strong bearish signal.
Bears are gaining momentum for test of immediate support at 1.1798 (rising 55SMA) and could stretch towards key short-term support at 1.1722/20 (top of thick daily cloud / Fibo 38.2% of 1.1118/1.2092 ascend) where bears are expected to face strong headwinds.
Near-term action favors selling upticks for extension towards daily cloud top, however, overall bullish picture sees current pullback as correction of broader uptrend which should ideally reverse at 1.1720.
From the fundamental side, negative impact from the politics is expected to fade and focus to turn towards the ECB as recent talks of rate hike and reduction of the QE program, expected to remain the key driver of the Euro.
Alternatively, loss of 1.1722/20 pivots would signal deeper correction and expose supports at 1.1662 (17 Aug trough) and 1.1605 (50% of 1.1118/1.2092).
Res: 1.1861, 1.1893, 1.1913, 1.1936
Sup: 1.1798, 1.1720, 1.1662, 1.1605
