EUR/USD Attempting to Breakout Over 1.1345 Fibonacci Level

The Euro is trading higher on Thursday after the European Central Bank kept key interest rates unchanged despite record rises in inflation.

The central bank’s benchmark refinancing rate remains at 0%, the rate on its marginal lending facility sits at 0.25% and the rate on its deposit facility was kept at -0.5%.

At 13:47 GMT, the EUR/USD is trading 1.1348, up 0.0042 or +0.37%. The Invesco CurrencyShares Euro Trust ETF (FXE) is trading $105.00, up $0.33 or +0.32%.

The latest decision comes as market participants have started pricing in two rate hikes for the ECB this year. However, the central bank has tried to play down that possibility.

ECB President Christine Lagarde is set to explain the bank’s latest monetary policy decision at 13:30 GMT.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1122 will signal a resumption of the downtrend. A move through 1.1483 will change the main trend to up.

The short-term range is 1.1483 to 1.1122. Its retracement zone at 1.1303 to 1.1345 is resistance.  This zone stopped the rally at 1.1330 on Wednesday.

The minor range is 1.1122 to 1.1360. Its retracement zone at 1.1241 to 1.1213 is potential support.

Short-Term Forecast

The short-term direction of the EUR/USD on Thursday is likely to be determined by trader reaction to 1.1303 to 1.1345.

Bullish Scenario

A sustained move over 1.1345 will indicate the buying is getting stronger. If this move creates enough upside momentum then look for a near-term surge into 1.1483. There is no resistance standing in the way until this level.

Bearish Scenario

A sustained move under 1.1303 will be a sign of weakness. This could trigger a break into the minor pivot zone, currently at 1.1236 to 1.1209.

Side Notes

Trader reaction to 1.1303 to 1.1345 sets the near-term tone. Aggressive counter-trend buyers are trying to trigger a breakout over 1.1345. Bearish trend traders are trying to form a potentially bearish secondary lower top.