EURUSD is trading within a narrow range during European session on Tuesday, following strong rebound in past two days after larger bears were rejected at key support at 1.0635 (May 31 low).
Technical picture remains increasingly bearish on daily chart (rising negative momentum / MA’s in full bearish setup) and warn that corrective action might be near its end (capped by daily Tenkan-sen).
Inflation in the Eurozone was slightly lower than expected in August, which should add pressure on the currency, though consumer prices are still over two times above ECB’s 2% target.
This keeps the central bank alerted, despite dovish signals from the last policy meeting, as the policymakers left the door opened for possible further hikes, should the situation deteriorate.
Near-term action can be described as consolidation while moving between 1.0700 (daily Tenkan-sen / psychological barrier) and 1.0635 support, with sustained break above 1.0700 to allow for stronger correction and expose upper pivots at 1.0768 (Sep 12 high) and 1.0792 (daily Kijun-sen).
Conversely, firm break of 1.0635 support would open way for test of next key supports at 1.0611 (Fibo 38.2% of 0.9535/1.1275 uptrend) and 1.0553 (daily Ichimoku cloud top).
Res: 1.0700; 1.0752; 1.0768; 1.0792.
Sup: 1.0675; 1.0654; 1.0635; 1.0611.
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