EURUSD: pair approaching an important support zone at 1.1128 – 1.1108

Previous:

On Tuesday the 23^rd of June, trading on the euro closed significantly down against the dollar after spending virtually the whole day in a downtrend. A speech from RBA Deputy Governor Christopher Kent and an announcement from US President Donald Trump on a bipartisan budget agreement bolstered the US dollar. The euro shed 4.6%, slumping from the 1.1207 mark to close the day at 1.1151.

The announcement of Boris Johnson as the victor in the Conservative Party’s vote for a new leader, confirming his as the new Prime Minister, as well as speeches from the Bank of England’s MPC, helped to set a stable downwards trend on the EURUSD pair, leading to a breakout of some key levels around 1.1194. The dollar’s rise was finally mitigated by weak housing data in the US.

Day’s news (GMT+3):

• 10:30 Germany: Markit manufacturing PMI (Jul).
• 11:00 Eurozone: Markit manufacturing PMI (Jul).
• 16:45 US: Markit manufacturing PMI (Jul).
• 17:00 US: new home sales (Jun).

Current situation:

The pair is approaching the support zone between 1.1128 and 1.1108. We have the ECB and Fed meetings ahead, where decisions will be made on the economies’ key rates. Markets expect the US Fed to lower interest rates at the next meeting, while there are hints at an easing of monetary policy by the ECB. Depending on how markets react to this, we could get a bounce from 1.1108, with the euro further strengthening.