The Euro surged during the first half of yesterday’s session after the broad weakness of the US Dollar, following the diminishing odds of a rate cut in this month’s FOMC meeting. However, the Single currency bulls lost momentum as the weak German Factory orders weighed on the sentiment by reminding the market of the high probability of a recession in Germany. Today, a weaker German Industrial Production could weigh further on the negativity surrounding the country, which in turn could take the common currency even lower. Furthermore, this month’s NFP will be very crucial, as Chair Powell will be giving a speech right after the data comes out. If the data beats expectations, it will pressure the Fed to sound less dovish and push the dollar higher. However, in case the data disappoints, Powell will definitely mention rate cuts in his speech, which will likely send the dollar lower.
The Single currency attempted to break above 1.1065 but were rejected, as the demand was much lower against the supply, sending the European currency lower towards the 50-day moving average. Today, the bulls are once again trying to find momentum to retest and take out yesterday’s highs. If the bulls successfully break above that level, then a retest of the medium-term trend line and the 200-day moving average will be on the cards. However, if the bullish momentum was lost, then we will likely see the Euro printing new daily lows towards 1.10 and possibly lower.
Support: 1.10 / 1.0965
Resistance: 1.1065/ 1.1110