The EUR/USD failed to hold above the 1.12 handle on Monday and refreshed its session low at 1.1164 in the American trading hours amid a moderate recovery seen in the greenback. As of writing, the pair is trading at 1.1166, down 0.3% on the day.
Following the comments from New York Fed President William Dudley, who suggested that the wage growth could reach 3% over next year or two and argued that pausing the tightening cycle could hurt the economy, the greenback gathered traction with the US Dollar Index erasing the majority of its bearish opening gap. The DXY, which ended the previous week at 97.15, is now at 97.13, up 0.27% on the day.
- Fed's Dudley: Halting tightening cycle would damage economy
- Fed’s Dudley: Inflation is ‘a little lower’ than Fed would like
After French President Emmanuel Macron's La République En Marche had won 350 of 577 seats on Sunday, major equity indexes in Europe recorded solid gains on Monday. Germany's Dax gained 1.1% and closed at record highs, while the U.K.'s FTSE and France's CAC added nearly 1.0%. The euro had a difficult time finding demand in the risk-positive environment.
Although there are no macro data left in the remainder of the session, a press conference on today's Brexit negotiations between the EU and the U.K. could bring some volatility to the pair.
Despite today's fall, the pair continues to trade within its two-month-old trading range. The RSI on the daily graph eased back to 50 handle, showing neutral conditions in the short-term. 1.1130 (Jun. 15 low) could be seen as the first technical support ahead of 1.1100 (/Fib. 78.6% retracement of late-April/early-June rise) and 1.1000 (psychological level). On the upside, resistances align at 1.1200/10 (psychological level/20-DMA), 1.1295/1.1300 (Jun. 14 high/Nov. 9 high) and 1.1365 (Aug. 18 high).
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