The pair is up by nearly 0.7% on the day as the dollar holds weaker
The pair just touched a session high of 1.1304 and buyers are looking to extend gains after seizing near-term control earlier in the day. Of note, price has also moved back above the 100-day MA (red line) @ 1.1262 and that sees price action now caught between the two key daily moving averages with the 200-day MA (blue line) @ 1.1352.
For now, offers and resistance around 1.1300-05 are helping to keep gains in check but with the momentum against the dollar still holding up, we could see buyers attempt for a push towards the resistance trendline at 1.1332 and possibly test the 200-day MA.
Those will be key levels to watch out for over the next few sessions as they will represent key technical breaks - especially the 200-day MA - if and when the time comes.
Fundamentally though, although the greenback remains weak now, there's still an argument for the dollar to see a bit of a pullback here. As mentioned earlier, the first thing is about pricing. Markets have already priced in a full 25 bps rate cut for next month, a further 25 bps rate cut by October and another 25 bps rate cut by March 2020.
Unless traders are looking towards a 50 bps rate cut for July, there's limited scope for the dollar to stick to the downside even if the focus remains on the Fed over the next few weeks.
The other reason is that the ECB themselves are growing more dovish and are likely to cut rates themselves. Economic data from the euro area will be key in determining whether or not the single currency has the momentum to run higher still.
As such, look out for the PMI survey reports due tomorrow and also for inflation data next week as they will offer more clues on how soon the ECB may choose to react.
