The Euro bounces on upbeat Ifo data / fresh risk sentiment, but firmer direction signal is still needed


The Euro edged higher in Asia/early Europe on Tuesday, boosted by optimism over US-China trade talks, but gains so far look limited, as signals are conflicting.
Monday’s second consecutive close in red and below 20DMA, was negative signal, accompanied with rising bearish momentum on daily chart.
On the other side, Monday’s inverted hammer generated initial signal of reversal, with better than expected German Ifo business climate figure (Aug 92.6 vs 92.2 f/c and up from July’s 90.4) which hit the highest since March, adding to positive signals.
Current recovery attempt see the minimum requirement in close above 10DMA (1.1833) to sideline immediate downside risk.
Larger picture, however, still points to deeper correction of larger uptrend, ahead of attack at key 1.20 barrier.
Several weekly candles with long upper shadows signal strong headwinds that bulls face, with weekly indicators started to turn south from their peaks and reinforcing signals of correction.
Initial pivots lay at 1.1754 (21 Aug low) and 1.1833 (10DMA), with violation of either one to generate initial direction signals.
Higher base at 1.1700 zone remains key support and break here would lead towards deeper correction.
Conversely, lift above Friday’s high at 1.1883 (also 61.8% of 1.1965/1.1754 bear-leg) would signal an end of corrective phase and shift near-term focus higher.

Res: 1.1834; 1.1859; 1.1883; 1.1915
Sup: 1.1784; 1.1754; 1.1711; 1.1695