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Talking Points:
- EUR/USD Technical Strategy: Flat
- Euro posts largest one-day gain in six months against US Dollar
- Waiting for upswing to fizzle before re-entering short position
The Euro is digesting gains below the 1.08 figure against the US Dollar having posted the largest daily advance in six months. Prices turned higher as expected after finding support above the 1.05 figure and finding fuel for recovery in the aftermath of Italy’s constitutional referendum.
From here, a daily close above the 23.6% Fibonacci retracement at 1.0767 exposes support-turned-resistance at 1.0851 (October 25 low), followed by 1.0929 (38.2% level). Alternatively, a reversal back below the 14.6% Fib at 1.0667 opens the door for a test of a long-term support shelf in the 1.0462-1.0520 area.
After booking initial profit, the second half of short EUR/USD trade activated at 1.0700 was stopped out at breakeven. The overall trend continues to look bearish but an actionable setup to re-enter the position appears to be absent for the time being.
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