Euro extends lower after Fed; key supports coming in focus
The Euro remains offered in early Thursday’s trading and extended weakness to five-week low (1.1737).
The pair holds in red for the third straight day, following multiple upside rejections that left daily candles with long upper shadows, pointing to recovery stall and reversal.
Upbeat report from Fed, which pointed economic recovery and upgraded its projections, although sticking to prolonged ultra-accommodative policy, lifted the dollar and deflated the single currency.
Today’s probe below pivotal supports at 1.1754/52 (21 Aug / 9 Sep lows) was bearish signal which may open way towards key supports at 1.1700 zone (1.1711, recent range low of 12 Aug / 1.1695, daily cloud top and 1.1689, Fibo 38.2% of 1.1168/1.2011 rally).
Break of these supports would generate initial reversal signal and risk deeper correction of Mar/Aug 1.0635/1.2011 ascend.
Rising bearish momentum and descending stochastic and RSI on daily chart, support the notion, however, fresh bears are expected to face strong headwinds from key supports and rising thick daily cloud.
The cluster of daily MA at 1.1824/36 zone marks initial resistance and near-term action is expected to remain biased lower while these barriers cap.
Alternatively, break and close above would ease bearish pressure and keep the price in the middle of the range.
After Fed delivered its verdict, markets focus on today’s key events: Eurozone inflation report for August, BoE’s interest rate decision and US jobless claims.
Res: 1.1824; 1.1836; 1.1874; 1.1900
Sup: 1.1752; 1.1737; 1.1711; 1.1695