Richard Perry
Independent Analyst
The outlook for the recovery in the euro is being threatened. Tuesday’s decline resulted in a bearish outside day (a move above the previous high only to close below the previous low). This suggests there is a turn in sentiment and the momentum indicators confirm the deterioration with RSI and Stochastics falling away. I have been talking for the past few days about the key initial support being at $1.2700 and that a move back below the support would see the bulls on the back foot again. Overnight we have seen $1.2700 tested but not yet broken, however the rebound has not been enough to prevent the pressure remaining. A breach of $1.2700 opens the higher reaction low at $1.2600 a break of which would be confirmation of the end of the recovery. There would now need to be a move back above yesterday’s high at $1.2840 to avert the change in sentiment.
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