The Euro took off yesterday and broke above important levels on the rising odds of Fed rate cuts. The market-based probability of a rate cut at the Federal Reserve’s meeting in July has surged to 53 percent this week. Furthermore, the market is now expecting the Fed to cut rates by more than 60 basis points by the year-end. Thus, the US Dollar may continue to lose its reign during the day ahead. However, the common currency may lose some ground if Eurozone’s CPI prints below expectations.
The Euro broke out from the yearly bearish trend line, 1.12, opening doors for a potential bullish reversal for the common currency. Price reached as high as 1.1262 during yesterday’s session, since then it pulled back and found support around 1.1240s. The bulls are currently looking to take advantage of this momentum by taking the single currency higher towards 1.13. The bears however, need to break below 1.12 again to regain control.
Support: 1.1245 / 1.1216
Resistance: 1.1262 / 1.13