Last week, demand for the US currency was growing amid a hike in US interest rates. However, on Friday, market sentiment changed, and the European currency started strengthening against the US Dollar.
At the beginning of this week, the pair kept on growing while traders were taking profits on large volumes of short positions. Moreover, the European currency gained support from Germany’s macroeconomic releases. Producer Price Index confirmed the forecast of 0.2%; Consumer Confidence came in at 9.4 points, 0.1 above the forecast.
Today, attention needs to be paid to GDP data for the third quarter, due in the US.
Support and resistance
At present, the pair is likely to decline within a descending channel towards the level of 1.0560 (March lows). Otherwise, the pair might strengthen to the level of 1.0960 the breakout of which would lead to a growth towards new highs.
The US Dollar is strongly overbought and has to get support from fundamental factors to continue its growth. At the same time, demand for risky assets is increasing, and macroeconomic releases indicate economic situation in the eurozone is getting stable.
Support levels: 1.0855, 1.0775, 1.0710, 1.0690, 1.0650 1.0600, 1.0570, 1.0525, 1.0460, 1.0410.
Resistance levels: 1.0960, 1.1040, 1.1075, 1.1200, 1.1255, 1.1320, 1.1385, 1.1450, 1.1540, 1.1600.
Short positions can be opened from the current level with targets at 1.0600, 1.0560 and stop-loss at 1.0990.
Pending buy orders can be placed above the level of 1.1000 with the target at 1.1200.