EURUSD bounced after politics overshadowed positive economic data and sent dollar lower
The Euro is consolidating under fresh recovery high at 1.2287 on Friday, following previous day’s strong bounce.
The single currency benefited from fresh weakness of the dollar which pulled away from six-week highs.
This time politics overshadowed bullish outlook after President Trump announced plans of impose tariffs on imported metals.
Increased concerns about possible trade war deflated the greenback, previously boosted by hawkish stance of Fed chief Powell, with US data released on Thursday, adding to bullish sentiment. Strong US Manufacturing numbers in Feb; rising consumer income and spending and jobless claims at the lowest since 1969, were insufficient to maintain dollar’s bullish sentiment, as Fed Chairman Powell slightly toned down hawkish stance from the testimony two days ago but kept positive tone and rising fears on trade war prompted investors out of dollar.
The pair bounced after hitting new nearly two-month low at 1.2154, failing to penetrate ascending daily cloud, which continues to underpin.
Another negative signal for Euro bears was failure to close below cracked pivotal support at 1.2173 (Fibo 38.2% of 1.1553/1.2555 / 55SMA).
Yesterday’s bounce generated bullish signal on formation of bullish Outside Day, validation of which shows minimum requirement on close above Thursday’s recovery high at 1.2173, while further bullish signal will be generated on firm break above falling 10SMA (1.2292).
Overall picture is still negative (10/20/30SMA in bearish setup / 14-d momentum returning to negative territory) and keep in play risk of fresh weakness, while the price remains below 10SMA.
Break and close above 10SMA is needed to sideline existing downside risk, while lift above falling 20 SMA (1.2321) would generate stronger reversal signal.
Res: 1.2292; 1.2321; 1.2345; 1.2360
Sup: 1.2251; 1.2205; 1.2173; 1.2154