The Euro pulled back during yesterday’s session after the Federal Reserve cut interest rates by 25 basis points for the second straight meeting, however, officials were split on the need for further easing with five seeing no change in rates by the end of the year, five wanting one more cut and seven expecting two cuts. Hence, most observers believe the Fed may be done cutting rates for now. The market, therefore, may price out expectations for a rate cut in December, possibly keeping the US Dollar better bid in the short-term, especially against the Single currency, as the ECB recently adopted a strong dovish bias. Looking forward, the US will release the September Philadelphia Fed Manufacturing Index and August Existing Home Sales; both are expected to print lower than the previous month. If the results beat expectations, we will likely see the greenback soaring and pushing the common currency towards the yearly low.
Despite yesterday’s drop, the Single currency keeps printing higher lows on the chart since September 12, as the bulls keep showing their resiliency and the unwillingness to give up the key 1.0930 support level. As long as the Euro keeps trading above 1.1015, the pair could possibly push towards 1.1070 resistance. We need to see the pair breaking out from this narrow price range, to confirm the next possible wave on the common currency.
Support: 1.10 / 1.0930
Resistance: 1.1065 / 1.1110