The Single currency plunged to new yearly low, below 1.11, after a very hawkish Fed cut relative to market expectations. Chair Powell started his press conference by calling the 0.25% rate cut as ‘insurance’ against any possible downturn, and that it’s just a ‘mid-cycle adjustment’, hinting the rate cut isn’t the start of a trend. Powell’s comments increased market volatility and sent the greenback to new yearly high. The bearish sentiment on this pair will likely continue in today’s session, mostly if the German and the EU Manufacturing PMI data misses market expectations, adding further pressure on the Euro. Later in the day, the US, in its turn, will publish July’s ISM Manufacturing PMI, a better-than-expected data will help soar the Dollar even higher, sending the common currency possibly below 1.10.
The Euro collapsed to new yearly low, breaking below the major support level 1.11. The bulls were able to temporarily stop the bleeding at 1.1035, but price action remains weak and the bears are still in full control. If 1.1035 is broken, the sell-off will accelerate taking the common currency lower to test the major psychological round figure, 1.10. The bulls on the other, will attempt to retest yesterday’s broken support, 1.11.
Support: 1.1035 / 1.10
Resistance: 1.11 / 1.1160