On Monday the pair was corrected due to the strong USA Markit Manufacturing PMI publication, which exceeded the expectation in June and reached the level of 57.8 points (the most significant growth from 2014).
At the moment the pair is trading within the range of 1.3700–1.1345, as the market is calm due to the Independence Day celebrating in the USA. The market will activate on Wednesday, after the EU Retail Sales and USA FOMC Minutes publication. The Minutes can clear the further intentions of the regulator. The investors are sure that the monetary policy will be tightened in the future, as it was confirmed by the FRS officials, including the head of the FRS Janet Yellen, but the specific time of the interest rate increase is unknown.
Support and resistance
From the technical point of view, the pair can be corrected too, as the price is around the upper border of a strong sideways channel. In such conditions the decrease can develop to the area of the middle line of Bollinger Bands 1.1250 and further, to 1.1190 (Fibonacci correction 23.6%) and to 1.1100 (area of crossing with the Fibonacci fan line 38.2%). The possibility of the downward correction is confirmed by the technical indicators. The MACD histogram consolidated in the positive zone. Stochastic is leaving the overbought area and forms a sell signal. The growth can restore if the price consolidates above the level of 1.1440 with the targets at 1.1530 and 1.1610.
Support levels: 1.2500, 1.1190, 1.1100, 1.1050.
Resistance levels: 1.1440, 1.1530, 1.1610.
Short positions can be opened at the current price with the targets at 1.1250, 1.1190 and stop loss at 1.1390.
If the price is set above the level of 1.1440, the long positions can become relevant with the targets at 1.1530, 1.1610 and stop loss at 1.1400.