The Euro fell during yesterday’s session as market participants piled in the greenback after US and China have agreed to resume trade talks during the G-20 Summit. The negative sentiment on the single currency was also caused by recent data imbalance. German Manufacturing PMI remained in contraction territory and the Euro-zone index missed the market’s expectations, lowest in 3 months, while US ISM Manufacturing PMI improved in June. The market was pricing in a rate cut by the Fed during the July FOMC, but if the US keeps beating its macroeconomic data, Powell will have to backtrack its policy by at least delaying any possible rate cut any time soon, which will automatically boost the Dollar higher. Today, the macroeconomic calendar will be lighter for both economies, with Germany releasing May Retail Sales, while in the US, the most relevant event will be a speech from Fed’s Williams.
The Euro bears took over yesterday by breaking below the psychological support 1.13. The sellers are currently in control, a retest and fail to break above 1.13 will confirm further losses on this pair, taking price back towards a very important support area, 1.1240-50. The bulls need to protect that level with everything they have got, as it coincides with the 200-day moving average, and the bullish trend line that started since the beginning of June.
Support: 1.1250 / 1.12
Resistance: 1.13 / 1.1350