The EURUSD pair opened with Gap up on early Asian market hours testing 1.16 handle as the leaders of the European Union reached a deal on the thorny issue of migration at their summit. The pair is currently trading at 1.1649 up 0.70% as EU leaders struck a deal on migration after all-night talks, the bloc’s president Donald Tusk said on Friday, after Italy had blocked an agreement until it got more help on the issue which means that Merkel’s head is at least saved, for now. It will still depend on what kind of deal is brought to back to the round table in Berlin, but for now markets can at least breathe a sigh of relief. Though it’s not just the euro that is pushing higher, the dollar index is trading at session lows now with the greenback falling against all major currencies too with exception to the yen only.

The migration row was threatening the EU’s unity and could have brought down German Chancellor Merkel’s coalition government. Consequently, the common currency had dipped below the long-term ascending trend line (drawn from Dec 2017 low and April 2017 low). However, the migration deal has pushed the EUR back above the key rising trend line. It remains to be seen if the common currency is able to capitalize on this relief rally. On release front yesterday, the data from Germany showed that the inflation measured by the CPI grew by 0.1% on a monthly basis in June following May’s 0.5% growth while the annual CPI eased to 2.1%.

In the meantime, the sentiment data released by the European Commission showed that the overall confidence in the European economy continued to weaken in June. On US market real-GDP expanded by 2% in the first quarter, falling short of the market expectation of 2.2%. Today’s European and American market hours will have investors focus on Euro zone CPI data and the core-PCE price index which is the Fed’s preferred gauge of inflation in United States. US Greenback continues to trade weaker against major global currencies and US dollar index is on downtrend movement as well. A positive Euro zone macro data will result in the pair closing in favor of common currency well above 1.168 handle. Expected support and resistance for the pair are at 1.1631 / 1.1613 / 1.1580 and 1.1680 / 1.1700 / 1.1720 respectively.

This article was originally posted on FX Empire