EUR/USD rejected at falling trendline, focus on PMIs and Italian 10-yr yield

• The EUR failed to take out a key falling trendline yesterday as the Fed signaled readiness to hike rates in September.
• The common currency could take a beating if the PMI's, due today, print below estimates and the 10-year Italian yield spikes.

The EUR/USD fell to 1.1550 in Asia, having faced rejection at the trendline sloping downwards from the April 19 high and July 31 high.

The Fed minutes released yesterday showed the policy makers are poised to continue gradually raising interest rates, meaning the rate differential is set to widen further in the USD-positive manner in the near future. As a result, the greenback picked up a bid in early Asia.

Looking ahead, the EUR/USD could extend the decline to 1.15 if the German and Eurozone PMIs, scheduled for release today, show the trade war is having a negative impact on the Eurozone economy.

The EUR traders should also keep an eye on the Italian government borrowing costs. The 10-year Italian government bond yield created a bullish outside-day candle yesterday and hence looks set to rise in the EUR-negative manner.

EUR/USD Technical Levels

Resistance: 1.1577 (61.8% Fib R of 1.1747/1.1301), 1.1610 (50-day moving average), 1.1628 (Aug. 8 high)

Support: 1.1527 (5-day moving average), 1.1508 (June 21 low), 1.1497 (100-hour moving average)