The Euro moved higher from new 10-month low at 1.1509 on Wednesday after rumors that Italy may not force snap election provided temporary relief.
Additional boost to the single currency in early Wednesday’s trading came from better than expected German retail sales which rose 2.3% in April, heavily beating forecast for 0.5% rise, in the strongest monthly increase since October 2016.
However, current bounce is seen as positioning for fresh weakness, following failure on initial attack at 1.15 support.
Strong bearish momentum and daily MA’s in firm bearish setup, support the notion.
Falling 5SMA (1.1624) is expected to ideally cap recovery, with extended upticks to face strong barriers at 1.1681/95 (broken weekly cloud top / Fibo 38.2% of 1.1996/1.1509, reinforced by falling 10SMA).
Eventual break below 1.15 handle would open Fibo support at 1.1447 (50% retracement of 1.0340/1.2555 rally).
Only break and close above 10SMA would sideline bears for stronger correction.
Today’s EU calendar is full with focus turning towards German labor data and Inflation report for May, which could provide further support to the single currency on upbeat releases.
Res: 1.1624, 1.1681, 1.1695, 1.1709
Sup: 1.1500, 1.1447, 1.1402, 1.1370
