A release of better that expected data on the US ISM Non-Manufacturing PMI led to sharp appreciation of the buck against the common European currency and resulted in a breakout from two junior ascending channels. An active recovery of the exchange rate seems unlikely, as the northern is contains a bunch of technical indicators, such as the weekly PP at 1.1631 and the falling 55- and 100-hour SMAs. Moreover, there is a slope on a that is likely to serve as an additional barrier.
For this reason, the pair is expected to gradually slip to the bottom towards near the 1.1580 mark. However, for now the rate is squeezed between two vises at 1.1625 and 1.1600 and might continue this horizontal movement until catching a proper momentum.
During the previous trading session the currency rate slipped to support area near the 1.1580 mark, as expected, made a rebound and returned to the place from which it started.
As the pressure from falling 55- and 100-hour SMAs hasn’t gone anywhere, the pair is still projected to move in the southern direction towards the weekly S1 located at the 1.1572 level. There is also a need to take into account an additional barrier formed by the slope that is moving along the falling 200-hour SMA. Moreover, the market continues to be dominated by bears, as the number of traders with bullish sentiment reaches only 40% on average.
Even if the Euro makes an attempt to surge amid an impulse from Draghi speech in Frankfurt, this recovery is expected to have a limited effect due to additional resistance set up by the weekly PP at 1.1631.