As the currency pair did not have any fundamental background that could justify a rapid move, it finished the week near the 55-hour . However, in early hours of the new trading session it broke though combined support set up by the 38.2% level and the weekly PP and approached the bottom boundary of a three-week long . The reason for such sudden fall was based on news about Merkel’s failure to form a three-party coalition.
Nevertheless, such weakening of the Euro is expected to have limited effect, as the above lower support line is additionally secured by the 200-hour and the monthly PP located at the psychological 1.1700 level. At the same time, the rebound is unlikely to proceed above the 1.1760 mark especially when this area will become protected by the falling 55- and 100-hour SMAs .
The common European currency continued to lose value against the Dollar in a junior descending channel, as expected. In first hours of this trading session it made a rebound from the bottom trend-line of a dominant ascending channel, which was additionally supported by the rising 200-hour SMA. From larger pattern’s perspective the currency pair should succeed to break through combined resistance area formed by the 55- and 100-hour SMAs, the weekly PP, the 38.2 Fibonacci retracement level around the 1.1765 mark.
However, the rate might actually end the day outside the senior channel due to additional pressure exercised by the 100-day SMA. In addition to that, the aggregate market sentiment remains 62% bearish and majority of traders continue keeping negative outlook on the Euro.
In line with expectations, the pressure exercised by 100-day SMA shoved the currency rate out of the channel. Nevertheless, as the pattern was additionally backed up by the 200-hour SMA, the pair did not make a fully-fledged breakout.
For this reason, bulls are expected to continue pushing the rate towards the upper trend-line of a junior descending channel that crosses combined resistance level formed by the 100-hour SMA, the weekly PP and the 38.2% Fibonacci retracement level near the 1.1760 mark. As traders are largely bearish on this currency pair, a breakout to the top seems unlikely. Moreover, the northern side remains protected by the above 100-day SMA.
In this sense, the only thing that could strongly decrease value of the buck would be release of worse than expected American Core Durable Goods Orders data.
A release of the disappointing US Core Durable Goods data created an upside momentum that enabled the pair to break through combined resistance formed by the 100-hour SMA, the weekly PP and the 38.2% Fibonacci retracement level. The subsequent publication of the FOMC Meeting Minutes as well as lowered anxiety about political situation in Germany only extended the surge and elevated the pair to October 26 high located at the 1.1837 mark.
From trade patterns perspective, yesterday’s soar signified a rebound from the bottom boundary of a senior ascending channel. In essence, the pair is free to continue the surge, facing barriers only near the 1.1860 and 1.1880 levels. However, an area around the 1.1840 represents location of an alleged upper edge of the adjusted dominant descending channel, which is likely to a new rebound.
After making a rapid advance two days ago the currency exchange rate entered into consolidation phase, fluctuating between the 1.1837 support and the 1.1860 resistance levels. As the United States are having Thanksgiving holidays and there are scheduled no fundamental data releases in Europe, the pair is not expected to make any active movements today as well.
In support of this assumption, the southern side remains protected by combined support formed by the monthly R1 and the 50% Fibonacci retracement level, while the northern side contains other barriers near the 1.1874 and 1.1860 marks. But, in general, the Euro is expected to continue gaining value against the Dollar in one-month long ascending channel and heading towards the 1.2000 level.