The Euro recovered ahead of the European Central Bank nominated President Lagarde’s speech, after the ISM Manufacturing PMI surprised the market by printing below 50, which means the US is likely heading towards a recession. If Christine Lagarde reiterates that the monetary policy needs to remain highly accommodative and expresses willingness to use all the tools at the disposal to counter the economic slowdown and weaker inflation, which could lead the Single currency to break above 1.10. Post-Lagarde’s speech the focus would shift to the final German and Eurozone PMI data, Eurozone retail sales and speech by ECB’s Lane. If the data was relatively well, it could reinforce the move towards 1.10 and possibly even higher.
The Single currency bounced from the major multi-year support level 1.0940, as the bulls are trying to extend the recovery towards the elusive 1.10 resistance level, where can also find the bearish trend line dating back to August 23. The bias remains with the bears as long price remains capped below 1.1030. If the bulls lose their recent momentum, then the common currency could lose its ground and retest its recent lows, 1.0940.
Support: 1.0965 / 1.0940
Resistance: 1.10 / 1.1030