The Euro regained traction on Tuesday but remains within a consolidation range, signaling that larger bulls remain in play, as the pair is in steep rally for the fourth consecutive month and the action is underpinned by last week’s large bullish candle.
Near-term action received boost from upbeat German/EU ZEW economic sentiment data, drop in German inflation and weaker dollar.
Technical studies are in full bullish setup on daily chart, though overbought conditions warn of stronger headwinds on approach to targets at 1.0930 (weekly cloud top) and 1.0942 (50% retracement of 1.2349/0.9535 downtrend).
A healthy correction should be contained by converged daily Tenkan/Kijun-sen (1.0678) to offer better buying opportunities attack at 1.0930;42 targets, violation of which would expose psychological 1.10 level and 100WMA (1.1094) in extension.
Caution on dip below weekly cloud base/weekly Tenkan-sen (1.0548) which would weaken near-term structure and allow for deeper pullback.
Res: 1.0874; 1.0900; 1.0942; 1.1000.
Sup: 1.0780; 1.0732; 1.0678; 1.0610.
