Several attempts to hold above 1.1600 has led to exhaustion among buyers
The pair is moving lower as the dollar is holding steady ahead of European trading, moving now towards the 1.1550 level after breaking below the 100-hour MA (red line) earlier in the day. Buyers managed to hold off several tests of the level since trading yesterday but with price unable to keep above 1.1600, it looks like sellers are starting to win out.
Yesterday’s high touched 1.1621 and failed to test the 100-day MA as well, which also suggests that price bias continues to favour sellers.
With the break below the 100-hour MA now, there is minor support around 1.1546 but the key level to watch out for will be the 200-hour MA (blue line) @ 1.1539. Break below that and the near-term bias turns more bearish for the pair.
As markets start to calm down, the trading picture becomes clearer again as Italian budget risks continues to weigh on the single currency alongside flagging growth outlook. Meanwhile, for the dollar there is the case of funding demand working in favour of the greenback as we head towards the end of the year so that is something to consider before the US midterms come into focus.
The key risk in the day ahead will come from the Fed minutes. There isn’t much to scrutinise from the Fed’s decision and statement in the last meeting but the key will be to look out for discussions on the neutral rate and where the Fed believes the ceiling is in the current tightening cycle. That will set up the outlook for rate hikes moving into 2019.