The Euro managed to close positively on Friday despite the big rise in the Italy-Germany yield differential. The yield differential may cap the Single currency’s upside potential around 1.1250. However, the pair may still be able to carve out moderate gains the way it did on Friday, as President Trump might go down the road of FX intervention following the growing speculation that China’s decision to allow the Yuan to depreciate beyond 7 per US Dollar. The bulls and the bears remain confused amid these two opposite fundamental forces, as they wait for the price to confirm their bias.
The Single currency bulls were rejected at the 200-day moving average for the fourth consecutive day, as the buyers attempted to recover after price broke below the symmetrical triangle pattern. The lack of bullish follow through is shifting the sentiment to the bear’s side as the bears are looking to retest 1.1160 in today’s session. The bulls, on the other hand, must somehow break above 1.1250 to shift the bias to their side.
Support: 1.1160 / 1.1110
Resistance: 1.1250 / 1.1280