Last week, the European Central Bank (ECB) policy meeting failed to spur momentum for the euro as taper talk failed to make it to the centre of discussions. Technically, there is momentum loss providing the basis for a roll lower for EUR, according to Benjamin Wong, Strategist at DBS Bank.
Short-term support pivot at 1.2125 purged
“There is momentum loss with EUR unable to progress beyond late-May’s 1.2266 highs, and a near-term 1.2125 support pivot has given way.”
“A EUR rollback would keenly eye the focal point of the trend support that had connected 1.1603 through 1.1704. However, downside momentum can only rise proportionally stronger if EUR can bypass the moving average support at 1.2000 and the daily chart’s 200-day moving average at 1.1994.”
“Note the clear importance of 1.1944 where there is strong Ichimkou cloud support. 1.1944 is also a front to the 50-week moving average level. This level is key, as its upside thrust in early June 2020 kicked up a 11.7% price rally for EUR, and it certainly contained the then decline to 1.1704 in early April this year.”
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