Even though the Euro climbed more sharply than expected amid the news that Angela Merkel agreed to form large coalition with the Social Democrats, the movement remained in line with general expectations. As long as the pair stays within the medium-term that is backed up by the rising 55-, 100- and 200-hour SMAs, it is likely to continue advancing against the Dollar towards the 1.2000 mark that represents an intersection of the pattern’s upper boundary and the monthly R2. In shorter perspective bears might try to gain a momentum, although the plunge is unlikely to exceed the 1.1870 level, as this area is secured by the 61.8% level, one of the above MAs and the weekly PP. However, the red scenario is unlikely due to formation of a minor pattern, which presupposes further surge.
After reaching the 1.1960 level the currency exchange rate returned back to the 55-hour SMA located at 1.1900, as expected. The correction was based on hawkish comments made by the Fed’s Kaplan as well as anticipation of the Governor Powell appear before Congress and Trump’s meeting with Senate Republicans regarding the new tax reform.
If traders concentrate on positive moments of those meetings, the pair is likely to plunge even further, towards combined support formed by the weekly PP and the 100-hour SMA near 1.1865. Even though bears might take the lead in second half of the day, the overall movement of the rate is still expected to be guided by bulls. Their first goal is expected to be the new resistance at 1.1960, while the ultimate is located at 1.2000.
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