The Euro bulls finally got a break from the bears’ domination yesterday, after dropping initially to its five-week lows at 1.0988 before rallying to trade above the 1.10 psychological handle. The main reason behind this push was the data from the EU. Germany’s Q3 GDP showed that Eurozone’s largest economy avoided a recession when it printed a 0.1% uptick, better than the -0.1% expectations. Meanwhile, the GDP report for the whole EU came in as expected at 0.2%. Additionally, the US 10-year Treasury yields dropped to their lowest level since November 7 at 1.80%, causing weakness on the greenback. However, we have to keep in mind that the overall sentiment remains bearish on this pair as long as the ECB remains much more dovish than the Fed. Today, inflation and trade data from Europe are scheduled to be released, and later on, the US Retail Sales in the American session, which could be the trigger to halt this recent rally and resume the sell-off.
The European currency bulls bounced back from the temporary break below the 1.10 key support level as the buyers are eyeing to retest 1.1040 resistance, which is also the 50-day moving average. A push towards that level is a likely scenario before the bears take over once again as the overall sentiment remains bearish. If that happens, the sellers will be looking to take out the 1.10 level and stay below it this time to expose further weakness and downside risk.
Support: 1.1017 / 1.10
Resistance: 1.1030 / 1.1040