EURUSD extends recovery on Italian hopes / strong EU data
The Euro extended recovery on hopes that renewed attempts of Italy to form a government and avoid snap elections which could deepen political turmoil.
The single currency also benefited from better than expected German inflation data (May m/m 0.5% vs 0.3% f/c) as well as weaker than expected US GDP (Q1 2.2% vs 2.3% f/c).
Also, US ADP report which is usually used as an indication for coming US non-farm payrolls report, showed private sector added less than expected jobs in May (178K vs 186K f/c) but previous month’s figure was revised lower to 163K (from 204K).
Solid European data and weaker than expected US figures, accompanied by easing political tensions in Italy, create positive environment for Euro.
Recovery cracked initial barrier at 1.1630 (falling 5SMA) and turned focus towards pivotal 1.1695/97 barriers (Fibo 38.2% of 1.1996/1.1509 / falling 10SMA) break of which would generate reversal signal.
Broken 1.16 level now acts as initial support while 4-hr 10SMA (1.1577) is expected to keep the downside protected.
Res: 1.1650; 1.1695; 1.1728; 1.1753
Sup: 1.1600; 1.1577; 1.1530; 1.1509