EUR/USD: Bearish outside day to shift focus towards 1.13?

While keeping the weekly bullish outside candle present in our minds, I must say that the ferocious bearish daily outside day has now shifted the focus very short term towards 1.1310/1.13 based on the areas of high interest in the daily chart.

On the hourly, a huge level of confluence comes now into focus at 1.1350/55, where a buy-side campaign may be initiated. A break below exposes 1.1316 (Tuesday’s POC) ahead of 1.1270. A consolidation below 1.1316 on the hourly or a break sub 1.13 is needed to shift the outlook towards new cycle lows. However, if that were to be the case, based on the weakening cycles down, I can’t help but think this would constitute an interest buying proposition.

Yesterday, I made a case that if we kept breaking higher with the German vs Italian yield spread so depressed, it may have suggested that the market was placing the Italian concerns on the backburner short term as new thematics (Oil, Fed hikes) and familiar ones (Brexit, China trade) come to the forefront. At the end of the day, it wasn’t the case and looks like the sell-off in the EUR also has behind as a driver a component of fear amid the blow out of Italian yields.