EUR/USD has been trading in a well-defined range for quite some time. The low end of the range is 1.1120, which was visited twice – a double-bottom. Will it break lower?
The single currency has been hurt by the banking problems, with Deutsche Bank serving as the protagonist in this story. However, the recent drop of the world’s most popular currency pair is mostly due to the strength of the greenback.
Monetary policy divergence remains the name of the game: the European Central Bank is still set to expand and modify the QE program. While this will not be a material addition of monetary stimulus, the direction is still easing. On the other hand, the Federal Reserve is advancing in the tightening, with recent data “strengthening the case” for such a move. The ISM Manufacturing PMI beat expectations.
Further support below 1.1120 appears at 1.1070, albeit this is weak support. The round number of 1.10 follows. 1.0960 is already strong support and the post-Brexit low of 1.0910 follows. Resistance awaits at 1.1280 and 1.1360.
EUR/USD daily chart, showing the range:
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