The Euro extend its losses for the third consecutive day as the US-German bond yield differential could widen on the dovish ECB expectations. The common currency sell-off was triggered after the ECB's rate-setting committee member Olli Rehn said the central bank's stimulus package could be bigger-than-expected. Rehn's comments reinforced expectations that the ECB will counter recession fears with aggressive easing which is a negative for the Single currency. Moreover, a better-than-expected US Retail Sales data pushed the greenback higher, putting the European currency under additional pressure. Today, the current bearish sentiment on the pair will likely continue if the US Building Permits does not disappoint market participants.
The Euro bears took back control by pushing price below 1.1110, after the bulls lost the critical support 1.1160, eyeing next the yearly low, 1.1027. The bearish domination will probably continue as long as price remains below the recently broken support, 1.1110. A clean break above will push the price back towards 1.1160 for a retest.
Support: 1.1027 / 1.0950
Resistance: 1.1110 / 1.1160