The Euro bounced yesterday as the US Dollar fell across the board, despite an escalation in US-China trade tensions. The US has more than doubled tariffs on the $200 Billion worth of Chinese goods, which made Beijing to vow that it will strike back, lowering the probability of a breakthrough in negotiations between the 2 countries. Lower-than-expected US PPI also added pressure on the Dollar as it reaffirmed expectations that pace of inflation is unlikely to gather momentum, leaving the Fed to remain on pause for the immediate future. Traders will focus on the US – China trade negotiations as it will continue today, also the US CPI will be released in the American session, a lower reading will validate Fed’s decision to pause rate hikes, leaving the Dollar exposed to further weakness.
The Euro jumped as highs as 1.1251 during yesterday’s session, but ended the day by slashing gains to close at 1.1215. 1.1230 (R1) and the 200-day moving average (orange line) are holding as a strong resistance level so far, a break above this area will boost the single currency to retest the long-term downtrend 1.1250 and possibly 1.1260 (R2). The sentiment remains bearish thus gains on the common currency is likely to remain limited, as the dollar bulls could take back control once price reaches around critical resistance levels.
Support: 1.1185 / 1.1150
Resistance: 1.1230 / 1.1260