EURUSD penetrates daily cloud on fresh weakness after soft ECB minutes
The Euro extended weakness after release of ECB minutes and broke below key support at 1.2327 (daily cloud top / Fibo 38.2% of 1.2215/1.2396 gull-leg).
The minutes of ECB’s last month meeting showed strong concerns about trade war and its impact on confidence.
Inflation remains the key issue, as confidence in inflation path increases but inflation convergence will proceed gradually.
The ECB is also worried that recent strength on Euro could affect inflation and pointed on necessity of further monetary support after bond buying program ends.
Cautious tone from the ECB put the single currency under fresh pressure. Bearish signal of penetration of daily cloud needs confirmation on today’s close below 1.2327 pivot, which would complete reversal pattern on daily chart and keep the downside vulnerable.
Fresh weakness pressure strong support at 1.2305 (10SMA / 50% retracement) and could extend towards next pivot at 1.2284 (Fibo 61.8% of 1.2215/1.2396 upleg).
Slow stochastic is reversing from overbought territory on daily chart and 14-d momentum breaking into negative zone, supporting bearish near-term scenario.
However, geopolitical tensions remain as one of key factors which could influence the market action in coming sessions.
Res: 1.2327; 1.2340; 1.2379; 1.2400
Sup: 1.2305; 1.2284; 1.2257; 1.2215