Bearish engulfing and weak German data weigh on Euro
The Euro remains at the back foot on Tuesday and extends weakness below 1.1800 handle following Monday’s post-vaccine rally stall above 1.1900 barrier and subsequent weakness that resulted in a daily fall of 0.6%.
Monday’s bearish engulfing pattern increases downside pressure with fresh negative signals on penetration od daily cloud (spanned between 1.1811 and 1.1760) as cloud top marked solid support.
Near-term tone was soured further by weaker than expected German data as ZEW economic sentiment dropped to 39 in Nov from 56.1 on Oct and also fell below expected 41.7, but Nov figure remains below record -49.5 in March, keeping fears reduced.
Expectations that the ECB would ease policy soon also weigh on the single currency, but traders are still net long Euro that keeps in play dip-buying scenario, with extended dips to stay above 1.1760 zone (50% retracement of 1.1602/1.1919 rally) to keep positive bias alive.
Rising bearish momentum and south heading stochastic warn of further weakness which would bring bears fully in play on firm break of 1.1760 pivot.
Res: 1.1800; 1.1843; 1.1890; 1.1919
Sup: 1.1779; 1.1760; 1.1743; 1.1723