EUR/USD consolidates above Fibo support

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EUR/USD consolidates above Fibo support

FITITOL--> FXstreet.com (San Francisco) - Monday saw the EUR/USD pair peel back slightly after EU summit-inspired rallies late last week, although it appears market pessimism might be creeping in.

The U.S. dollar advanced against most of trading counterparts overnight, fueled by negative manufacturing readings in the US, with the ISM PMI having signaled its first contraction (below 50.0) since July 2009.

On the other side of the coin, the euro encountered selling interest after news that Finland and the Netherlands are opposing plans to give the ESM the option to buy government bonds.

“The EUR/USD fell to find support around 1.2570, 23.6% retracement of this year slide, and consolidates nearby in a tight range,” comments Valeria Bednarik, Chief Analyst at FXstreet.com.

The analyst adds: “The downside is favored if price breaks below menti oned Fibonacci support, while only a clear recovery above the [4-hour 200 EMA] should point for a short term bullish rally in the EUR/USD.”

EUR/USD sits quietly around the 1.2580 mark in early Asia after closing New York a 1.2575 vs. 1.2655 late Friday. To the downside, further support is noted at 1.2520 and 1.2490, while resistance levels lie at 1.2625, 1.2680 and 1.2710.