The Euro extends its gains after the greenback was dropped on fears of uncertainty might pressure the Fed to consider more rate cuts as US-China trade war starts getting out of hand. China allowed its currency to drop sharply on Monday to the weakest level in more than a decade, and it announced that companies have halted purchases of American agricultural goods. The Trump administration escalated tensions even further by taking the historic step of labeling China a currency manipulator. The risk of these trade tensions are escalating to a point at which it may cause a severe economic slowdown or even a recession. The US Dollar will likely remain under pressure as long as trade tensions escalate. Today, traders will be looking at the German Factory orders as the market expects an increase, having dropped below 0% last month. A positive reading will likely extend the current bullish sentiment on the Single currency.
The Euro bulls took out the 1.12 important resistance level and tested the 200-day moving average, 1.1250, but price found resistance at that level and pulled back towards 1.12, as the bears were waiting on the other side. The buyers need to protect the 1.12 support to keep the recent momentum strong and revisit yesterday’s high. The bears on the other hand, need to break back below 1.1180.
Support: 1.12 / 1.1180
Resistance: 1.1250 / 1.1280