The Euro fell to new two-month low on Wednesday, hit by significant miss of PMI data from EU, Germany and France, which added to negative outlook on expectations of ECB rate cut on Thursday.
Extension of Tuesday’s strong fall (the pair was down 0.5% for the day, in the second biggest daily fall in July) came closer to key 1.11 support zone.
ECB is in focus, with wide expectations for 10 basis points cut, but traders also look for more dovish tone from the central bank that would leave the door open for further cut in September.
Such scenario would increase risk of break below 1.11 zone (2019 low lays at 1.1107) which would spark fresh extension of downtrend from 1.1412 (25 June high).
Strong bearish momentum and daily MA’s in full bearish setup, support the notion, with additional negative signals being generated on completion of H&S pattern on daily chart and close below Fibo 76.4% of 1.1107/1.1412 ascend (1.1179).
Bears might stay on hold ahead of 1.11 zone supports on deeply oversold conditions, but could be also squeezed if the ECB’s tone is less dovish than expected.
Broken supports at 1.1280 zone now mark initial resistances, followed by broken neckline (1.1205), break of which would sideline bears.
Res: 1.1155, 1.1180, 1.1205, 1.1222
Sup: 1.1126, 1.1116, 1.1107, 1.1050
