The Euro reversed direction after hitting daily low at 1.2275, driven by upbeat US CPI data and bounced strongly, reversing initial losses after data and extending through Asian session highs at 1.2392.
It seems that dip after unexpectedly strong US inflation numbers was just good positioning for traders who are long Euro, to enter fresh longs at better levels.
Euro bulls remain underpinned by expectations that the ECB will start monetary policy earlier that initially expected and fresh rally today is on track to generate strong bullish signal on close above cracked 1.2400 barrier (Fibo 61.8% of 1.2522/1.2205 pullback) and signal that corrective phase may be over.
Daily techs are returning into full bullish setup as fresh rally moved above converged 10/20SMA’s and 14-d momentum is reversing from negative territory.
Bullish scenario on firm break above 1.24 handle would expose Fibo 76.4% barrier at 1.2447, en-route towards recent peaks and double upside rejection at 1.2537/22 (25 Jan / 01 Feb highs) and next target at 1.2597 (Fibo 61.8% of 1.3992/1.0340, May 2014 / Dec 2016 fall).
Strong support at 1.2350 zone, provided by converged 10/20SMA’s should ideally keep the downside protected.
Res: 1.2434; 1.2447; 1.2500; 1.2522
Sup: 1.2350; 1.2325; 1.2300; 1.2275
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