Euro cracks key supports after overall hawkish Fed minutes

The Euro hit new 5 ½ week low in Asia on Thursday and generated fresh bearish signal on Wednesday’s close below important Fibo support at 1.0879 (61.8% of 1.0635/1.1275) and probe below rising daily cloud (spanned between 1.0887 and 1.0945).

The single currency came under increased pressure after Fed minutes of July meeting (released late Wednesday), which showed overall hawkish stance of the US policymakers.

Although the FOMC members were divided over the need for more rate hikes, pointing to growing risk to the economy on further rise in borrowing cost, they were united in their commitment to continue to fight inflation and bring it to 2% target, which markets saw as hawkish signal.

Slowdown in early European trading on Thursday after the price dipped below the cloud, was so far seen as consolidation, with oversold conditions on daily chart contributing to the scenario.

Limited upticks should keep overall bearish structure intact and offer better levels to re-enter bearish market, with repeated close below broken 1.0879 Fibo level and sustained break below daily cloud, to confirm signal and open way for test of next target at 1.0786 (200DMA / Fibo 76.4%).

Daily studies maintain strong negative momentum, with long upper shadows of Wed/Tue daily candles, pointing to bearish pressure and adding to negative outlook.

Near-term action should stay under 100DMA (1.0930) which capped upticks in past two day, while bears could be questioned if the price bounces above falling 10DMA (1.0942).

Res: 1.0930; 1.0950; 1.0980; 1.1000
Sup: 1.0851; 1.0800; 1.0786; 1.0733