The Single currency surged higher during yesterday’s European session after the future leader of the ECB; Mrs. Christine Lagarde affirmed that, given persistently low inflation, a ‘highly accommodative policy is warranted for a prolonged period’. The Bullish sentiment was also supported by the German and EU August Markit Services PMI data, which both revised higher. Meanwhile, the US Trade Balance posted a deficit of $54.0B putting additional pressure on the greenback. Earlier this morning, the US and China agreed to have a trade deal by the beginning of October, which could possibly halt the Fed to cut rates, after Powell reiterated number of times in his previous FOMC speeches, that the trade war was the main reason of his dovish stance. Today however, the focus will be on US employment data, including the ADP survey, and the ISM Non-Manufacturing PMI for August, if the data disappoints it could put the dollar under further selling pressure in the short-term.
The Single currency bounced from the major multi-year support level 1.0940, and broke above the short-term trend line before hitting a resistance level at 1.1040, which is also the 50-day moving average. If the bulls want to gain control, they need to keep the Euro trading above 1.10 for a possible further upside move. Or else, the bears will come back and push price lower to retest the yearly low.
Support: 1.10 / 1.0965
Resistance: 1.1040 / 1.1065