The Euro dropped significantly on Friday after a better than expected US Retail Sales diminished the probability of a Fed rate cut in June and July. However, the market still expects the central bank to cut rates at least by 50 basis points by the end of this year. According to Reuters, the Euribor rates indicate the ECB will keep the interest rates in the negative territory until the second quarter of 2023. Market sentiment turned positive for the greenback after this news, as the single currency will likely face more downside on the horizon. Looking ahead, ECB President Draghi will set today’s tone possibly by more dovish comments on Euro zone’s monetary policy outlook.
The single currency broke below 2 support levels on Friday, ending the day just above 1.12 and around the 200-day moving average. The bears will try to stay in control by protecting the 1.1220 resistance level and by attempting to break below the psychological support 1.12, to add more bearish pressure on the Euro. However, if the bulls break above 1.1220 then a corrective push towards 1.1260 is expected.
Support: 1.12 / 1.1180
Resistance: 1.1220 / 1.1260