EUR/USD Daily Forecast – Euro Trades in a Range Near Three-Week Lows

After a quiet start to the week, EUR/USD has fallen into a range while investors await Thursday’s ECB meeting.
Jignesh Davda

EUR/USD was little changed on Monday as US markets were on holiday in observance of Martin Luther King Day, which led to small trading ranges in the dollar pairs.

Things are expected to pick up today as the North American traders return to the markets. However, the main focus this week will be the European Central bank meeting which takes place on Thursday. The economic calendar is light pertaining to EUR/USD ahead of it.

The European Central bank is expected to keep monetary policy on hold and is likely to acknowledge the recent improvement in inflation. They may also comment on the stabilization in manufacturing. In such a scenario, EUR/USD might not see as much of a  reaction as it typically does during central bank meetings.

Later in the session today, Germany’s ZEW will release its latest economic sentiment data although the release typically accompanies a muted response. There isn’t any significant data on Wednesday that stands to move the pair.

Technical Analysis

EUR/USD posted a strong downward move on Friday but momentum has since fizzled. On a daily chart, the pair has posted an exhaustion candle for Monday although this is not something that should be looked into too much considering the US holiday.

EURUSD 4-Hour Chart

Support in EUR/USD at 1.1072 will be important ahead of the ECB meeting. This level held the pair higher in the second half of December. Further, there is a rising trendline near the level to create a support confluence. The trendline originates from the October low.

The first level of resistance to the upside is seen at 1.1106. A break of the level could see the pair extend to resistance at 1.1129.

In a similar fashion, the dollar index (DXY) is showing some signs of exhaustion as it approaches resistance from it’s late December highs. In addition to that, the same level also held the index lower on several attempts between November 2018 and March 2019.

Bottom Line

  • EUR/USD has fallen into a consolidation after a sharp move lower on Friday.
  • The economic calendar ahead of Thursday’s ECB meeting is relatively light. This  suggests the pair might continue to trade in tight ranges.
  • A notable support confluence comes into play at 1.1072
Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.