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Euro Dollar trading (March)
Session close: Settled at 1.1302 up 56 ticks
Fundamentals: The Euro’s three-day recovery is its best since the end of January. The British Pound slipped overnight as it appeared U.K Prime Minister May’s Brexit deal would not pass today’s Parliamentary vote, and this dragged on the Euro. Still, price action quickly recovered on the heels of soft inflation data in the U.S. The Dollar weakened after Core CPI came in at +0.1% MoM and +2.1% YoY, each a tenth below expectations. This read confirms the Federal Reserve’s ‘patient’ rhetoric and although it is not as dovish as the ECB, the maneuver relative to previous positioning and relative to expectations three and six months ago is just as equal; meaning the Euro was clearly in over-extended fundamental territory without the ECB getting more-dovish or the Fed less-dovish. In the near-term, it will become more and more about the evidence for each central bank to hold its current rhetoric. Tomorrow morning, ECB Members Mersch and Angeloni each speak at 3:30 and 3:45 am CT. Eurozone Industrial Production is due at 5:00 am CT. From the U.S, we look to a crucial read on Durable Goods at 7:30 am CT accompanied by PPI. There is a 30-year Bond auction at noon CT and ECB Member Coeure also speaks at that time. Traders also want to keep an eye on tomorrow’s vote in the U.K Parliament. After lawmakers shot down May’s Brexit plan, tomorrow they will vote on whether to extend the March 29th deadline to leave the EU without a deal.
Technicals: Traders who bought extreme weakness late last week want to make sure to capitalize on this recovery. First key resistance comes in at 1.1281 and price action is finishing out above there today, however, it hit major three-star resistance at 1.1311-1.13285 head-on before pulling back. The bulls have an edge heading into tomorrow with price action at and above 1.1281, but a failure to close out above major three-star resistance will quickly encourage profit taking from the bulls and repositioning from the bears.
Resistance: 1.1311-1.13285***, 1.1377-1.13935**, 1.1434-1.1447***
Support: 1.1213-1.12455****, 1.11845**, 1.1120*, 1.1085***
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