As we largely anticipated in our previous report, EURUSD
stopped its mid-term rally around 1.22 and embarked on a new
retracement wave that temporarily found support at 1.1950.
This move down was propelled primarily by data from the U.S.
housing sector and renewed confidence in further Fed rate
hikes. On the other hand, a drop of over 10% in U.S. new home
sales recorded last Friday gave some boost to the EUR, which
thus managed to end the week at 1.2036, just slightly below
its 200-day MA which stands at 1.2050.
A look on the daily studies show that the recent move from
1.22 to 1.1950 is also a move from the 75% retracement level
of 1.2325 - 1.1825 to the 25% Fib. level of the same wave.
This middle range could suggest a temporary mid-term balance
of the pair, before a possible shift in trend we already hinted
to last week. 1.2080 now stands as primary resistance (marking
also the exact half of the above mentioned wave), while on
the downside 1.20 and 1.1970 are now the dollar's immediate
targets. Daily RSI is still negative but looking up, while
4h MACD is now looking bullish. Possible tests of key support
at 1.1890 will probably give traders new clues as to whether
the pair is heading back to 1.1642 (and then lower at 1.1375)
before a bullish trend in EUR can develop. On the upside,
we expect 1.2130 to limit the pair for now, a break here pointing
to a possible new test of 1.2325.
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