Despite the lack of market moving economic data on Monday the U.S. dollar continued to strengthen against the euro and British pound. Short traders, therefore, continue to profit but we should remain vigilant as to potential corrections in both major currency pairs.
The euro trades under pressure and is currently hovering around the 1.11-mark. Short-traders are already preparing for a break of that crucial support level. Below 1.1090 we see next support levels at 1.1050 and 1.10 while on the upside, potential pullbacks could be limited until 1.12. Only a break above 1.1250 would change the bias in favor of the bulls.
The Eurozone ZEW Survey is scheduled for release at 9:00 UTC today but whether this report will have a significant impact on the euro remains to be seen.
The pound sterling tested its new support at 1.23. A renewed break below that level may send the pound tumbling towards 1.22 whereas any pullbacks might be currently limited until 1.2350/70. Above 1.24 however, we anticipate that the market will gain some bullish momentum towards 1.25.
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