Shallow correction to keep bulls intact
The Euro remains at the back foot at the start of the week and probing through psychological 1.10 support, pressured by firmer dollar and risk aversion.
However, fresh dips were so far limited, as Friday’s spike to pivotal support at 1.0960 zone (Fibo 23.6% of 1.0516/1.1095 / 20DMA) was short-lived and the action closed above 1.10 level, reinforced by 10DMA, leaving long-tailed daily candle, which suggests that the downside is well protected for now.
Renewed attempts lower need to stay above 1.0960 support zone to keep bullish bias, as the pair is in a larger uptrend which looks for limited dips before bulls resume.
Markets await Fed and ECB’s policy meetings this week, with the Fed likely to hike once more by 25 basis points before halting its policy tightening cycle for the rest of the year.
On the other hand, the ECB is widely expected to deliver 25 basis points hike, but the central bank could surprise by 50 basis points raise, as inflation in the Eurozone remains elevated and the ECB remains ready for more rate hike, depending on economic data.
This may offer further support to the single currency, which hit its new yearly high (1.1095) and may extend rally towards targets at 1.1195 (200WMA) and 1.1223 (Fibo 61.8% of 1.2266/0.9535).
Res: 1.1044; 1.1075; 1.1095; 1.1195
Sup: 1.0960; 1.0909; 1.0874; 1.0831