The Euro extends weakness on Friday and hits fresh three-month lows against the dollar, following sharp fall on Thursday.
The single currency slumped after the European Central Bank announced reduction of QE amount to 30 billion Euros per month, but extended bond buying program until September 2018 and left the door open for further extension of the program.
This reduced chances for rate hike in 2018, as monetary stimulus remains necessary and inflation stays anemic.
The Euro was down 1.38% on Thursday and generated strong reversal signal after breaking key supports.
Initial bearish acceleration broke below daily cloud base (1.1731) and took out 100SMA (1.1677) as well as the neckline of H&S pattern (1.1667), formed on daily chart.
Close below these supports was strong bearish signal, with today’s bearish extension approaching round-figure support at 1.1600 and eyeing next target at 1.1510 (Fibo 38.2% of 1.0570/1.2092 ascend).
Corrective action on profit-taking should be considered in the near-term, with limited upside as former breakpoint now act as strong resistances and expected to cap.
The pair is on track for strong bearish weekly close which would increase persisting bearish pressure.
Res: 1.1666, 1.1678, 1.1731, 1.1757
Sup: 1.1600, 1.1510, 1.1465, 1.1400