EUR/USD Daily Forecast – Euro Eases Back Ahead of ECB DecisionEUR/USD briefly traded at highs not seen since March yesterday but is seen edging lower ahead of today’s ECB decision.
EUR/USD is set to post a fourth straight week of gains and is the strongest major currency for the week and month thus far. Volatility is expected later today as the ECB is scheduled to deliver its latest monetary policy decision.
The European Central Bank is expected to stay on hold after increasing its Pandemic Emergency Purchase Programme (PEPP) at the last meeting by 600 euros which was larger than expected.
ECB President Lagarde may show some confidence in the press conference today as economic data since the last meeting has rebounded. However, inflation is expected to remain subdued and Largarde is likely to reiterate that there is a long road ahead before reaching their 2% target.
At the same time the ECB press conference takes place, the US will release it’s latest weekly unemployment claims figures. Analysts expect the declining trend in jobless claims to continue and forecast 1.25 million additional new claims compared to the prior week.
Equity markets have pushed lower in early trading which has weighed on EUR/USD as the pair has had a fairly strong correlation with risk assets as of late. The S&P 500 is set to open about 0.8% lower to wipe out a bulk of yesterday’s gains.
EUR/USD has posted four consecutive days of gains and is edging lower ahead of today’s ECB meeting. The 1.1400 level has come into play which offered resistance back in March to trigger a turn lower.
While above this level, the first upside target for the pair falls at 1.1495 which marks the spike high from March.
If EUR/USD fails to hold above 1.1400, there is risk of a further correction towards 1.1340 which is a previous resistance level.
The dollar index (DXY) bounced higher after a decline towards June lows and is attempting to recover. There may be some stops that have accumulated below the June low and this area could be a fist target for dollar bears.
- EUR/USD has steadily climbed higher since the start of the month and briefly traded at fresh 4-week highs yesterday.
- The ECB decision takes place later today. While policymakers are not expected to act, the meeting and press conference typically causes a volatile reaction in EUR/USD.
For a look at all of today’s economic events, check out our economic calendar.