The US Dollar is under pressure due to rising expectations of aggressive easing by the US Federal Reserve by the year-end. The US rate markets are currently discounting almost three 25 basis points rate cuts before the end of the year, which automatically puts the greenback in a vulnerable situation against safe havens and the Euro. However today, the common currency may come under pressure if the ECB’s Economic Bulletin, paints a negative picture of the EU economy, boosting recession fears and forcing markets to shift focus from rising dovish Fed expectations to the possibility of aggressive easing by the ECB.
The Single currency bulls retested the 200-day moving average (two days in a row), but so far the bears were able to hold that key level. The pair could resume the corrective bounce only if price successfully breaks above the 200-day moving average and the 1.1250 resistance level. However, the outlook would turn bearish if the Euro drops below 1.1167, and the sentiment would shift in favor of a drop towards 1.11 and 1.10s support levels.
Support: 1.12 / 1.1180
Resistance: 1.1250 / 1.1280