EUR/USD: Deeper auction rejected, wait and see mode

Cycles & Levels: No changes to highlight in the higher timeframes (weekly, daily). On the hourly, the expected setback has found an imbalance of demand at the test of 1.1350/60 area. I will not be surprised if the market finds a new range in the next 24h between 1.1350 and 1.1420. If I was pointed with a gun to my head to pick the next direction, the impulsiveness of the bounce, knowing that it matches an hourly up-cycle, places the risks for a potential upside resolution. If we find acceptance above the 1.1425/30, the next area of resistance will be found at 1.1450-55, recent swing high.

Correlations & Volumes: Monday’s bullish candle carries low volume activity. The close near the highs of the day, paired with the POC left behind, reinforces the prospects of a range at the bare minimum, with a potential upside resolution as written above. Notice the POC is found at 1.1390, which happens to be the midpoint of what might be an expected range between 1.1430 and 1.1350. That’s another clue suggesting that today’s trading has 3 key areas of interest (1.1350-6-, 1.1390-1.14, 1.1420-30). As per the correlations, the Italian premium is well off its highs (purple line), while the 5-year German vs US yield spread (blue line) communicates that engaging in sell-side at key areas is justified.