Richard Perry
Independent Analyst
The decline on the euro has temporarily been stabilised however I do not see this as too much to be positive about. There have now been two closing levels below the old key reaction low at $1.1130 to confirm for me the outlook has now changed. This is now at best a range play with the potential for the dollar strength to drag the euro lower again and I do not see this as a pullback before a further break to multi-month highs again. The deterioration in the momentum indicators suggests correction too and that rallies will be sold into. The intraday hourly chart shows the importance of the support at $1.1065, however I expect this to come under further scrutiny. The hourly momentum indicators which had become deeply stretched have simply unwound this oversold position and look to be renewing downside potential. I see this as a temporary range between $1.1065/$1.1180 with rallies now being seen as a chance to sell, whilst there is further resistance around the pivot level at $1.1200 and then up at $1.1290 to hold back any recovery. Below $1.1065 is support at $1.1035 and then the pivot at $1.0900.
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