The Euro extends post-German election weakness into third straight day with fresh pressure on the single currency coming from broadly stronger dollar. Tuesday’s remarks of Fed Chair Yellen, who said that the Fed needs to continue gradual interest rate hikes despite uncertainty about the inflation, raised hopes that the US central bank would act in December, as markets expect.
The Euro generated strong bearish signals on completion of H&S pattern on daily chart on break below the neckline (1.1848), as well as close below 1.1826/04 pivots (Fibo 61.8% of 1.1662/1.2092 upleg / 55SMA).
Fresh bearish acceleration on Wednesday dented Fibo 76.4% support at 1.1763 and eyes very strong supports at 1.1724/20 (daily Ichimoku cloud top / Fibo 38.2% of 1.1118/1.2092 rally).
Rising cloud which tracks bullish action since mid-Apr marks significant support which should ideally contain correction from 1.2092, with oversold slow stochastic on daily chart, supporting the notion.
However, strong near-term bearish sentiment may drive the price below cloud top and risk test of next pivot at 1.1662 (17 Aug trough), loss of which would sideline larger bulls for stronger correction.
Res: 1.1803, 1.1848, 1.1861, 1.1887
Sup: 1.1720, 1.1662, 1.1605, 1.1545
