Euro rises on fresh optimism, but more evidence required to signal reversal
The Euro benefited from Fed action and advanced 1.2% since opening in Asia, as renewed optimism boosted risk appetite.
Fresh bulls broke out of two-day congestion, formed above new three-year low and generated initial positive signal on break above past two day’s highs (where strong upside rejections occurred) and Fibo barrier at 1.0838 (23.6% of 1.1494/1.0635 fall), focusing on next barrier at 1.0901 (falling 10 DMA).
The action is supported by rising daily RSI which formed bullish divergence; stochastics’ emerge from oversold territory and rising momentum, while 5DMA turned sideways.
Bulls need close above 10DMA to confirm positive stance and expose 1.0963 (Fibo 38.2%), but will face a tough work as a cluster of daily MA’s between 1.0977 and 1.1082 (30/55/100/20/200DMA) marks very strong barrier.
Also, traders look for a verification of Fed’s latest measures in the Congress that would further improve the sentiment and boost Euro.
Broken Fibo 23.6% barrier now reverted to initial support (1.0838), guarding 5DMA (1.0736), loss of which will neutralize bulls.
Res: 1.0878; 1.0901; 1.0963; 1.0977
Sup: 1.0838; 1.0800; 1.0775; 1.0736