The European currency recovered some ground yesterday after US Building Permits plummeted in June. The chances of the US Federal Reserve cutting rates by 50 bps rose back to 35%, (after being dropped to 25% following Tuesday’s upbeat US retail sales data). This current market is very data sensitive as each important macroeconomic figure could impact the probability of the FED rate cut. Additionally, better-than-expected EU CPI numbers also helped the Single currency to push higher. The rising odds of aggressive easing by the Fed will likely keep market participants bearish on the US Dollar, as they wait for today’s Initial Jobless Claims and Philadelphia Fed Manufacturing Index data.
The Euro bulls protected the 1.12 psychological support and found some bullish momentum pushing prices higher towards 1.1240, which is also the 50-day moving average. If this recent momentum persists then the buyers will start targeting 1.1275 as their next challenging resistance. However, if the bears show up around these current levels, then we likely see price pulling back to retest 1.12.
Support: 1.12 / 1.1185
Resistance: 1.124 / 1.1275