EUR/USD Gains Ground Ahead Of ECB Interest Rate Decision

Key Insights

• Today, traders will focus on the ECB Interest Rate Decision and the subsequent commentary. 
• The rate is expected to stay unchanged, and the markets will be sensitive to comments about the future of the ECB quantitative easing program. 
• A move above 1.0900 will push EUR/USD towards the resistance at 1.0930.

Euro Gains Ground Against U.S. Dollar

EUR/USD is currently trying to settle above the resistance at 1.0900, while the U.S. dollar is under pressure against a broad basket of currencies.

The U.S. Dollar Index managed to settle below the support level at 99.75 and is trying to gain additional downside momentum. In case this attempt is successful, the U.S. Dollar Index will move towards the next support at 99.45, which will be bullish for EUR/USD.

Today, foreign exchange market traders will focus on the ECB Interest Rate Decision. While prices are rising fast, the ECB is expected to leave the interest rate unchanged at 0%, while the deposit facility rate is expected to remain at -0.5%.

The ECB is in a challenging position as the European economy has found itself under pressure at a time when inflation has become a significant problem. In this environment, the ECB will have to find a way to protect the economy without fueling inflation. It remains to be seen whether the ECB will be successful in this task.

Technical Analysis

EUR/USD is testing the resistance level at 1.0900. If EUR/USD manages to settle above this level, it will head towards the next resistance, which is located at 1.0930.

A move above the resistance at 1.0930 will open the way to the test of the resistance at the 20 EMA at 1.0950. In case EUR/USD settles above the 20 EMA, it will head towards the resistance at 1.0970. A successful test of this level will push EUR/USD towards the resistance at 1.0990.

On the support side, a move below 1.0900 will push EUR/USD back towards the support at 1.0885. In case EUR/USD declines below this level, it will head towards the next support level at 1.0865. A successful test of the support at 1.0865 will open the way to the test of the support at 1.0850.

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