EUR/USD: Price Is Again Testing Psychological Level of 1.10

FXOpen

An eventful news background creates increased volatility in financial markets.

Unlike the Fed, whose rhetoric is becoming softer, Europe's central banks are sticking to plans to maintain tight policies. The ECB said yesterday that policy easing was not even discussed at its two-day meeting, the Bank of England said rates would remain high for an "extended period," and Norway's central bank even raised rates.

This caused the pound and euro to rise sharply yesterday against a weakened USD.

However, today is the day of publication of PMI indices in Europe, which show that the economy in Europe is in a difficult situation, as the values ​​are below = 50:
→ French Flash Manufacturing PMI: actual = 42.0, expected = 43.3, previously = 42.9;
→ German Flash Services PMI: actual = 48.4, expected = 49.1, previously = 49.6.

The publication of PMI values today led to a sharp depreciation of the euro against the dollar, thus a correction occurred after a rally of two days.

At the same time, the EUR/USD chart shows that:

→ the price tested the psychological level of 1.10 for the second time. We wrote about the first puncture in the review on November 29;
→ the EUR/USD rate has been within the ascending channel (shown in blue) since October, however, the level of 1.10 creates an obstacle for the bulls, who probably see the goal of reaching the upper boundary of the channel;
→ the important level 1.075 acted as support. Bulls can also count on support from the median line of the ascending channel.

Tonight at 17:45 GMT+3 US PMI data will be published. Also in the US derivatives market, expirations of about $5.3 trillion are expected, which could provoke additional turbulence.

It is possible that we may see the formation of rising lows, which can be interpreted as efforts of the bulls to overcome the level of 1.10.

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