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James Hyerczyk

The Euro is trading nearly flat against the U.S. Dollar early Thursday, well ahead of the European Central Bank’s (ECB) interest rate and monetary policy decisions at 11:45 GMT and ECB President Mario Draghi’s Press Conference at 12:30 GMT.

The single-currency is hovering near a two-month low as traders see a 48% probability that European policymakers will lower a key deposit rate by 10 basis points to minus 0.50%, according to interest rate swaps. If the ECB decides to keep policy on hold Thursday, then look for President Mario Draghi to flag a rate cut for the next policy meeting in September.

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In other news, shortly before the ECB decisions, the Ifo Institute will release its closely-watched index of German business sentiment at 08:00 GMT. It should provide further clues about the health of Europe’s largest economy.

At 03:35 GMT, the EUR/USD is trading 1.1135, down 0.0004 or -0.04%.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The next two targets are the May 30 bottom at 1.1116 and the May 23 bottom at 1.1107.

The main trend will change to up on a trade through 1.1282. This is unlikely on Thursday, but the EUR/USD is ripe for a closing price reversal bottom. With the release of the ECB decisions and Draghi’s press conference, we could be looking at a “sell the rumor, buy the fact” situation.

The Euro is also trading on the weak side of a long-term Fibonacci level at 1.1185. This is helping to generate the downside bias. This is potential resistance.


Daily Swing Chart Technical Forecast

Early in the session, it’s all about momentum. If the downside momentum continues then look for the selling to possibly extend into the bottoms at 1.1116 and 1.1107. If momentum shifts to the upside then we could see a short-covering rally into 1.1185.


This is a preliminary report. We’ll have more on the EUR/USD later in the session. We’re not expecting too much movement ahead of the ECB announcements.

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