EUR/USD fell to a low of 1.1188 after a series of explosions in Brussels killed at least a 34 people and injured over 100 triggered a flight to safety and a broad based demand for the USD. Rise in EUR/GBP cross helped the pair trim losses to trade above 1.12, but hawkish comments from Fed’s Evans (a renowned dove) kept the bid tone around USD intact and ensured the spot closed on a weaker note at 1.1216 levels.
Technicals – consolidation likely, short-term top in place at 1.1342
Euro is flirting with 1.1295 (support of rising trendline drawn from Mar 2015 low-April 2015 low and extended + hourly 200-MA).
Given the daily RSI stays well above 50.00, a rebound from 1.1295 would trap bears on the wrong side of the trade, resulting in a unwinding of shorts and a rise to 1.1250 – 1.1257(5-DMA + 61.8% of 1.1714-1.0517 + 100% Fibo of 1.0517-1.1060-1.0711).
Only a break above 1.1257, preferably on a daily closing basis, would indicate increased odds of the pair chewing through 1.1280-1.13 hurdle to test last week’s high of 1.1342 in the next few days.
Meanwhile, a break below 1.1295 should yield a drop below 1.1173, only then the bullish calls would be put to rest, leading to a drop to 1.1115 (50% of 1.1714-1.0517).
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