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James Hyerczyk
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EUR/USD

The Euro is trading slightly lower on Thursday after the European Central Bank (ECB) decided to keep interest rates unchanged as market players look for clues on whether the central bank will soon lift its massive pandemic-era stimulus.

The move was widely expected so there was little reaction by traders, who are primarily focused on the upcoming U.S. consumer inflation report, due to be released at 12:30 GMT.

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At 11:57 GMT, the EUR/USD is trading 1.2175, down 0.0004 or -0.03%.

“The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics,” the bank said in a statement.

In other news, economists are expecting the U.S. May CPI to rise 4.7% from a year earlier, according to Dow Jones. In April, the CPI increased 4.2% on an annual basis, the fastest rise since 2008.

“There is a sense in the market that the Fed got the market under control saying that the inflation is transitory, so that’s the whole focus right now, whether that can be achieved or not,” said Ole Hansen, head of commodity strategy at Saxo Bank.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.2254 will change the main trend to down. A move through 1.2104 will signal a resumption of the downtrend.

The minor trend is also down. A trade through 1.2218 will change the minor trend to up. This will also shift momentum to the upside.

On the upside, the resistance is a 50% level at 1.2185. On the downside, potential targets are a pair of 50% levels at 1.2159 and 1.2125.

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Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Thursday is likely to be determined by trader reaction to 1.2185 and 1.2159.

Bullish Scenario

A sustained move over 1.2185 will indicate the presence of buyers. If this creates enough upside momentum then look for a potential surge into 1.2218. Taking out this level could trigger an acceleration into 1.2254.

Bearish Scenario

A sustained move under 1.2159 will signal the presence of sellers. This could trigger a sharp break into 1.2125. Watch for a technical bounce on a test of this level. If it fails then look for the selling to possibly extend into the main bottom at 1.2104. This level is a potential trigger point for an acceleration to the downside.

For a look at all of today’s economic events, check out our economic calendar.
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