EURUSD – near term bias remains bullish but firmer signals are needed to confirm direction
The Euro stands at the front foot on Friday and looking for retest of 1.25 zone, following bumpy ride on Thursday when it spiked to 1.2537 following ECB Draghi’s speech but reversed quickly on sharp dip to 1.2365.
The Euro moved higher on moderately dovish tone from Draghi but was pulled back on comments from the US President Donald Trump, who supported the policy of stronger dollar, conflicting comments from US Treasury secretary Mnuchin two days ago, who said that weaker dollar is good for America and send the greenback sharply lower across the board.
Fresh rally of Euro on Friday signals that corrective phase might be over as bounce from 1.2365 low retraced over 61.8% of Thursday’s 1.2537/1.2365 pullback and shifted immediate focus higher.
The notion is supported by firmly bullish daily techs with studies on lower timeframes returning to bullish setup after correction.
The pair is on track for strong bullish weekly close, which will mark sixth straight week in green and
also for very strong monthly performance, signaling the biggest one month gains since March 2016.
These are strong bullish signals which support further advance for test of next target at 1.2597 (Fibo 61.8% of larger 1.3992/1.0340 fall and possible extension higher.
Weekly close above 1.2500 is seen as minimum requirement for continuation of broader uptrend, with sustained break above 1.2597 barrier to confirm scenario.
On the other side, strong upside rejection on Thursday warns of extended consolidation if the pair fails to regain levels above 1.25, with Thursday’s low at 1.2365, expected to hold.
Conversely, initial bearish signal will be generated on loss of 1.2365 handle, while extension below rising 10SMA (1.2299) would signal reversal.
Res: 1.2493; 1.2537; 1.2567; 1.2597
Sup: 1.2450; 1.2412; 1.2365; 1.2299