Euro stands at the front foot but risk of stall and subsequent weakness persists
The Euro kept positive tone in early Monday’s trading, on fresh risk sentiment over renewed hopes for a coronavirus vaccine, although investors remain cautious ahead of this week’s key events – central bank meetings in UK, Japan and the US.
The near-term action from last Wednesday’s correction low at 1.1752 shows a series of higher lows that points to ascend, however bulls continue to face headwinds and so far failed twice to clearly break above pivotal Fibo barrier at 1.1851 (38.2% of 1.2011/1.1752 pullback).
The ECB expressed positive tone in the policy meeting last week that inflated the Euro, but short-lived rally (which rose through three important Fibo barriers but eventually fell and closed below) warns that bulls might be running out of steam.
Fading bullish momentum on daily chart warns of stall and bull-trap formation that would risk fresh weakness and possible return to 1.1752 low, as last week’s long-legged Doji candle signaled strong indecision, adding to uncertainty.
Repeated failure to close above 1.1851 Fibo barrier would increase risk of pullback, while eventual clear break above would generate initial bullish signal, which would look for confirmation on extension and close above next pivotal Fibo barrier at 1.1912 (61.8% of 1.2011/1.1752) cracked on Thursday’s post-ECB jump.
Res: 1.1851; 1.1881; 1.1912; 1.1950
Sup: 1.1832; 1.1809; 1.1797; 1.1752