Europe’s single currency attempted a comeback against the buck off the 61.8% Fibonacci retracement ratio at 1.1053 on the H4 scale, a touch north of March’s opening level at 1.1045, after free falling from highs at 1.1333. Sell-stop-liquidity south of 1.11 was also likely triggered, with price action recently engaging 1.12 as resistance, positioned just beneath January’s opening level at 1.1222. The relative strength index (RSI) is mildly bottoming a few points ahead of oversold waters.
In terms of the European Central Bank, we saw interest rates remain unchanged, despite recent cuts by G10 peers. The ECB’s decision to stand pat suggests policymakers don’t think another cut will do much.
Technical headlines on the daily timeframe recently engaged with support coming in at 1.1075, reinforced closely by the widely watched 200-day SMA (orange – 1.1100). The rebound from this angle has been considerable, consequently reclaiming a large portion of yesterday’s losses. Resistance, with respect to the daily scale, resides around 1.1349. The story on the weekly timeframe, however, reconnected with a long-standing channel resistance-turned support, extended from the high 1.1569, after receding from the 2019 yearly opening level from 1.1445.
Volatility remains high in the FX space, defiling many technical levels. The rebound from the 61.8% Fibonacci retracement ratio at 1.1053 on the H4 timeframe was of note, given close confluence from March’s opening level at 1.1045, daily support at 1.1075 and the 200-day SMA, as well as the weekly channel support. Well done to any traders who caught this move.
1.12 on the H4 may continue to serve as resistance, knowing January’s opening level at 1.1222 lurks close by. However, with weekly price testing channel support, and a lack of daily resistance, higher prices could be on the cards, potentially unlocking the door for bullish scenarios north of 1.12 today, targeting 1.13.
Disclaimer: The information contained in this material is intended for general advice only.