Forex commentary – Euro to maintain 1.56 support

Euro bounced sharply higher from the 1.5640 support area where we had indicated we would cover our short euro positions yesterday, but unfortunately, it did not reach the 1.5590-1.5610 strong support area where we had indicated we would establish new long positions.
The bounce since 1.5628 NY lo on Thursday failed at the 1.5738 level early Friday, but for us the significant resistance is at 1.5780. Break of this, confirms that a near term bottom has been established and signal euro strength back to 1.6040 and higher.
The ideal scenario would be for the euro to come back more time to test 1.5590-1.5640 area and if it holds, then its time to load up on euro long positions.

The dollar stopped short of testing our major resistance level of 1.0420 yesterday, which means we missed to short the dollar as the rally stopped at 1.0407. We have witnessed a drop to 1.0310, and now we are seeing a rebound, which if it reaches 1.0360-80 would be good level to sell, with stop reverse above 1.0420 break.

The dollar turned from heavy resistance area near 108.00, which is also close to the 200-day, indicating that the near term range of 108.25-104.75 is holding.

Sterling broke through quadruple support at 1.9900 and 1.9835 major support, which will hopefully pave the way for a decline to our immediate target of 1.9660. BNPP analysts say a daily close below 1.9870 will provide a bearish signal for GBPUSD and we pray that they are right.

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