Euro bounces after Fed action and bear-trap formation
The Euro rose on Monday, recovering from last week’s heavy losses (the pair was down 2.1% for the week), boosted by Fed’s overnight action of cutting interest rates by 100 basis points and bringing them to zero, in attempts to cushion snowball negative impact from corona virus pandemic.
Fresh recovery above 1.12 cracked Fibo 38.2% of 1.1494/1.1054 at 1.1222 and pressures 10DMA (1.1233).
Clear break here would improve near-term outlook and allow for stronger recovery towards 1.1275 (daily Tenkan-sen) and pivotal Fibo barrier at 1.1326 (Fibo 61.8% of 1.1494/1.1054).
The notion is supported by fresh bullish momentum and bear-trap pattern below 200DMA that formed on daily chart.
Caution on headlines that may change the sentiment, with Eurogroup and G7 meeting also in focus.
Initial support lays at 1.1200, followed by broken Fibo 23.6% at 1.1158 and daily Kijun-sen at 1.1136.
Only close below 200DMA (1.1099) would weaken near-term structure and expose next pivot at 1.1051 (Fibo 61.8% of 1.0778/1.1494).
Res: 1.1236; 1.1275; 1.1326; 1.1366
Sup: 1.1200; 1.1158; 1.1136; 1.1099