The Euro dropped yesterday despite the positive sentiment surrounding the US and China possible trade deal. The market bought US Dollars instead of the Single currency, possibly because the easing of trade tensions provides the Fed more room to pause the interest rate easing cycle. Therefore, another bearish close in today’s session cannot be ruled out. The selling pressure will likely strengthen if the US ISM Non-Manufacturing blows past expectations. On the other hand, a weaker-than-expected print could temporarily save the common currency from dropping.
The Single currency is trading around a very critical technical point, which is the rising trend line that dates back to the beginning of October, and the 50-day moving average. If the bears find enough momentum and break below this trend line, that could signal a trend shift in the market to the bears’ side, pulling the price back towards 1.11 and 1.1072 in the short-term. Therefore, the bulls must protect this level with everything they have to keep the sentiment in their favor.
Support: 1.11 / 1.1072
Resistance: 1.1150 / 1.1176