FxWirePro: EURUSD trades in a narrow range, markets eye Fed

Major support - 1.1100

EURUSD is trading in a tight range after hitting a low of 1.1107 on Thursday. It hits a high of 1.11610 and shown a minor decline after slight weak US PCE data. The annual core PCE came at 1.6% in Jun compared to the forecast of 1.7%. But US CB consumer confidence improved to 135 in Jul from 121.5 in Jun.

The central bank is expected to cut rates by 25 bps for the first time in 11 years. According to the CME Fed Watch tool, there is a 78.1% probability of 25 bps rate cut and a 21.9% chance of 50 bps rate cut.

US 10 year yield is trading flat and any major trend reversal only above 2.15%. The spread between US 10 year and German bund yield has widened to 246 bps from 226 bps.

On the flips side, the pair has formed a major temporary bottom around 1.1107 and any major weakness can be seen only below that level. Any break below targets 1.09097 (161.8% fib).

The near term resistance is around 1.11752 (23.6% fib) and any break above will take the pair to next level till 1.1200/1.1230 (21- day MA)/1.12860 (Jul 11th, 2018 high).

It is good to buy on dips around 1.11350 with SL around 1.1100 for the TP of 1.12300.