The greenback was favored over the Single currency on Monday after higher oil prices decreased the probability of a Fed rate cut in today’s FOMC meeting. However, the Euro took a turn for the better during yesterday’s US session after the Saudi Oil Minister said that oil supply is fully back online, which led the pair to close just below a critical resistance. Moreover, Germany released the September ZEW survey, which showed that Business Sentiment improved by more than anticipated. However, the assessment of the current situation in Germany deteriorated. Looking forward, the focus of the day will be the US Federal Reserve. The Central Bank is expected to cut rates by 25bps, which will probably lead the European currency to surge above 1.11. However, if the Fed surprises the market by not cutting rates, the dollar will likely soar pushing the common currency to new yearly lows.
The Euro bulls keep showing resiliency by not willing to give the 1.0930 key support and currently they are retesting a key resistance area, which is the medium-term bearish trend line and the 200-day moving average. A clean break above those levels will likely push the Single currency to a fresh multi-week high. However, if the bears were able to protect this area of resistance, then we could see price rolling over and possibly retesting the yearly low, 1.0930.
Support: 1.1065 / 1.10
Resistance: 1.1110 / 1.1165