Today could be the first time the Fed will cut rates in the past decade. The Dollar pulled back a bit during yesterday’s session but remains firm ahead of the FOMC meeting. The Single currency gained some ground after Germany published a better-than-expected CPI, giving a small bullish hope for the Euro. However, today Germany will release June’s Retail Sales along with the Unemployment Change and the EU will publish July’s CPI and GDP numbers. A dismal data would strengthen the case for aggressive easing by the ECB, sending the Euro lower, towards 1.11 ahead of the FOMC rate decision. Additionally, if the Fed cut rates only by 25bps, traders will likely perceive that as a positive and push the Dollar even higher sending the common currency below 1.11 for the first time since May 2017.
The Single currency is showing a bit of strength but will remain weak overall as long as price is trading below the 50-day moving average and 1.12. A push towards 1.1185-1.12 is a likely scenario before dropping below 1.11 on the FOMC rate decision. However, if the bulls were able to break above 1.12 they could possibly reverse the short-term momentum to the upside.
Support: 1.1107 / 1.1050
Resistance: 1.1185 / 1.12