The Euro attempted to break higher yesterday but only to reverse and close negatively on the day as trade tensions between the US and China escalates. The world’s second largest economy announced new retaliatory tariffs on $60 billion worth of US goods, injecting fear and uncertainty in the market place. China’s retaliation shattered the illusion that both countries can reach a permanent trade deal, but Trump tried to amend things by temporary pulling back from the additional tariffs on $320 billion worth of goods, but the damage has already been done. As the Trade Saga continues, the market sentiment will be dictated by any updates regarding that issue. Additionally, Germany and the Eurozone will release their ZEW Economic Sentiment data, a much higher reading could break the Euro above yesterday’s high.
The Euro tried to break above the bearish trend line, but price reversed and formed an inverted hammer candle on the daily chart. However, the common currency remains strong as 1.1230 (S1) and the 200-day moving average held as a strong support level and currently price is trying to retest yesterday highs. A successful break above 1.1260 (R1) could open door for additional strength on the single currency. If price loses momentum and breaks below 1.1215-1.1230, then we could likely revisit 1.1185 support.
Support: 1.1230 / 1.1185
Resistance: 1.1260 / 1.1280