EURUSD may extend correction towards 1.20 on hawkish Fed and benign ECB
The Euro extended recovery on Thursday to 1.2352 but remains under initial barrier at 1.2361 (10SMA). Profit-taking after four-day fall may boost the Euro further but no stronger recovery is seen. Hawkish Fed minutes yesterday added to the greenback’s recent bullish sentiment while mild tone from the minutes of ECB’s latest policy meeting is expected to keep the Euro at the back foot. That suggest that corrective phase from recent tops at 1.2537/55 may extend. Violation of key near-term supports at 1.2205 (09 Feb low which also marks the bottom of month-long range) and 1.2173 (Fibo 38.2% of Nov/Feb 1.1553/1.2555 ascend) would be strong bearish signal. The pair is holding within the range and requires stronger signal which will be generated on break out of congestion and will also confirm double top, which would be good reversal signals. Stronger bearish acceleration on break through 1.2205/1.2173 triggers would look for extension towards psychological 1.20 support. Selling upticks remains favored near-term scenario, with upticks to be capped by 20SMA at 1.2372 (also Fibo 38.2% of 1.2555/1.2259 bear-leg.