Recovery runs out of steam as downbeat EU inflation data darkens economic growth outlook
The Euro eases on Tuesday, deflated by firmer dollar and disappointing data, as the inflation in the European Union hit new record high in May and oil prices continue to rise, weakening bloc’s growth outlook.
Two-week recovery rally from new five-year low at 1.0349, failed to clear important barrier at 1.0767 (50% retracement of 1.1184/1.0349 / falling 55DMA), with subsequent weakness generating initial signal of recovery stall.
The pullback was signaled by overbought daily stochastic which also made a bearish divergence, with fading bullish momentum adding to negative signal, as recovery was weighed by falling and thickening daily Ichimoku cloud.
However, fresh weakness needs more evidence to signal pullback, with close below 10DMA (1.0665) to generate initial negative signal, which will require confirmation on extension through pivots at 1.0619 (Fibo 38.2% of 1.0349/1.0786) and 1.0586 (20DMA).
Res: 1.0767; 1.0786; 1.0800; 1.0865
Sup: 1.0683; 1.0665; 1.0619; 1.0586