EUR/USD Daily Forecast – Euro Trades in a Range Near Three-Week LowsAfter a quiet start to the week, EUR/USD has fallen into a range while investors await Thursday’s ECB meeting.
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.
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.
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.
- 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