The Euro fell yesterday, confirming a three-day losing streak, as market sentiment is still tilted to the bears’ side, after Friday’s better-than-expected US NFP data. The market has been pricing in a rate cut ever since June, but after Friday’s data, Fed Powell may not cut rates in July’s meeting. The weak German factory activity data released on Monday and Tuesday also played a role in pushing the Single currency lower. Traders seem to have scaled back expectations of aggressive Fed rate cuts over the last three days. This is evident from Dollar Index's 100 pip rally since Friday. Today, the focus will be on Fed Chair Powell as he will begin his two-day testimony on the economic outlook and recent monetary policy actions before the Joint Economic Committee.
The Euro attempted to break below 1.12 during yesterday’s session but the bulls fought back and closed the day above the psychological support for now. The buyers will need to find momentum and push price higher towards 1.1235, or else the bears will eventually break below 1.12 to target 1.1180 next, as market sentiment is on the bears’ side.
Support: 1.12 / 1.1180
Resistance: 1.1235 / 1.1260