The euro surged during the Asian session on Friday and the EURUSD pair was 0.60% higher in the morning, trading around 1.1630.
During the night, member states agreed to increase border security, set up holding centers to handle asylum seekers, and to speed up the process of determining whether people have the right to asylum and expelling those who don’t. Leaders also pledged to overhaul the rules for distributing migrants when a gateway country is overwhelmed, a key Italian demand. The euro rose about 80 pips after this news hit the wires.
However, more concrete details are missing and this appears as another kicking the can event, just to make Italian politicians happy.
Later in the day, the key inflation measure for the Fed is due – the PCE indices – and the market expects another leap higher to 2.2% from 2.0% previously (on the yearly basis). The core gauge is seen rising as well to 1.9%. Strong inflation numbers could support the greenback.
The pair has held the very strong support around 1.1500 – 1.1550 and is now testing the short-term bearish trend line at 1.1650. If this resistance falls, further squeeze rally could take the pair back to the 1.17 handle.
On the downside, the intraday support is at 1.16 and if the rally fades quickly, the 1.15 demand zone could be tested again.
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