The Euro slowed on Friday, signaling that strong rally of past four days might be showing initial signs of fatigue on approach to next very significant barrier at 1.1722 (base of falling and thickening daily Ichimoku cloud).
Bulls managed to crack strong resistance zone at 1.1667/97, consisting of Fibo 38.2% of 1.2082/1.1410 descend and converged 200/100/55DMAs, at the second attempt (after Wednesday’s attack was rejected and left bullish candle with long upper shadow).
Fading bullish momentum and overbought stochastic contribute to developing negative signals, though more action to the downside (return and close below MAs and broken Fibo 38.2%) will be needed to boost signal.
Meanwhile, near term action would keep bullish bias while holding above MAs (or at least not to drop below 1.1667 – Fibo / 200DMA) but increased headwinds from falling daily cloud should be anticipated.
We will closely watch reaction at this zone, with penetration of cloud and violation of 1.1746 (50% retracement) to sideline immediate downside risk and keep near term focus at the upside (initial signal of bullish continuation).
Traders will also focus on the developments on the peace talks between the US and Iran, as well as release of US March CPI data, as economists expect inflation to start rising, in reaction to crisis from the war in the Middle East.
Res: 1.1722; 1.1746; 1.1800; 1.1826.
Sup: 1.1688; 1.1667; 1.1640; 1.1585.
