Contrary to expectations, the common European currency was dominated by bearish market on Monday. Following a minor period of consolidation between the 55– and 100-hour SMAs, the pair breached the latter together with the 200-hour SMA a few hours later.
This strong downside momentum resulted in the pair testing the weekly S1 and the bottom boundary of a two-month channel circa 1.2360 by Tuesday morning.
Converging technical indicators suggest that the pair should recover some losses in this session. Gains, however, are expected to be limited due to the combined resistance of the 200-, 100– and 55-hour SMAs and the weekly PP located near the 1.2440 mark. A reversal from the weekly S1 would likewise confirm a newly-formed ascending channel (dashed lines).
