Euro bounces after drop on risk aversion but the downside remains vulnerable
The Euro regained traction in early European trading on Wednesday, following late Tuesday’s 0.4% drop on risk aversion after President Trump called off stimulus talks.
Tuesday’s close in red and failure to clear converged 30/55DMA’s generated initial warning that recovery leg from 1.1612 (25 Sep low) might be running out of steam.
Risk sentiment could be hurt more on pre-election political uncertainty in the US and gloomy outlook for economic recovery, as the second wave of coronavirus hits the world and many governments consider new lockdown measures.
Daily studies are weak as negative momentum is rising and stochastic heading south, with bearish engulfing on monthly chart, adding to negative signals.
Pivotal support lays at 1.1715 (10DMA) and break here would weaken near-term structure and risk further easing.
Today’s recovery faces headwinds at 1.1758/64 zone (20DMA / Fibo 38.2% of 1.2011/1.1612) which guards upper pivot at 1.1789 (converged 30/55DMA’s), violation of which would signal bullish continuation.
Res: 1.1811; 1.1830; 1.1858; 1.1870
Sup: 1.1747; 1.1715; 1.1686; 1.1658