The pair recovered 61.8% of May decline and tested levels above 1.1400. During the first part of the past week the euro benefited from the weaker dollar. However, in the second half of the week the single currency lost its bullish momentum.
The ECB began buying corporate bonds on Wednesday. The fact that the central bank didn’t start with highest-rated securities, but purchased bonds from companies, which had investment-grade rating from only one rating agency, showed investors that the ECB President Mario Draghi is serious about the region’s monetary stimulus. Another negative factor for the euro is uncertainty associated with Brexit vote, and this factor will remain in place until the British referendum on the EU membership that will take place on June 23.
The pair could be in consolidative mood before the Federal Reserve’s meeting on Wednesday. Technically it looks like we’ll see deeper correction to 1.1200, but for the euro to go below this point there should be good news from the United States. Its further direction will depend largely on whether the Fed reduces its rate forecasts for this year or not. Support is at 1.1215, 1.1140 and 1.1100. Resistance is at 1.1415, 1.1460 and 1.1500.
In the European economic calendar other important events include industrial production release on Tuesday, the publication of trade balance on Wednesday and the final inflation readings on Thursday. The ECB president Mario Draghi will have another chance to make an impact on the market on Friday.