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EUR/USD Price Forecast – EURUSD Rangebound Ahead of ECB MPC Update

By:
Colin First
Published: Mar 7, 2019, 06:56 UTC

The pair which is trading flat in Asian market hours will see further downside movement if ECB displays a dovish tone in its forward guidance scheduled to release today.

EURUSD Thursday

The EUR/USD pair has been trading range bound as both sides lack the strength to make a clear breakout price action. While the pair did see some level of downside action since the trading session began for the week as positive US macro data from earlier this week helped US Treasury Yields see some upside move adding to Dollar’s strength, bearish equity rout in US Wall street slowly began eating away at US dollar’s strength in the broad market. Further, yesterday’s disappointing US ADP Non-Farm Employment data added additional strain to USD bulls resulting Is USD losing its positive edge in the broad market temporarily. While EURO suffers from an inherent lack of fundamental strength to support bulls on recovery rally, the temporary weakness of USD has provided EURO bulls with a temporary breathing space resulting in rangebound price action during Pacific-Asian market hours today.

ECB’s Forward Guidance Tone To Influence Directional Bias

As of writing this article, EURUSD pair is trading flat at 1.1307 up by 0.01% as the day as bulls lack the strength to even establish a positive bias ahead of today’s main event – European Central Bank’s interest rate decision update and press conference with monetary policy committee. Investors expect ECB to announce plans for initiating TLTRO & delay rate hike plans for 2019 during today’s meeting and this has resulted in cautious investor sentiment. While expectations still remain at a speculative level, confirmation of TLTRO’s debut in near future will be a serious dovish blow to EURO as it was just last December when ECB ended its long term quantitative easing measures. Even aside from the interest rate decision update, the economic calendar for both EURO and USD remains highly active during today’s trading session and this is expected to keep price action highly volatile during the European and US market hours.

On the release front today, in the European market aside from ECB MPC update & Press conference, the macro calendar is scheduled to see the release of Q4 GDP data while the US calendar will see the release of Initial Jobless Claims data, Q4 – Non-Farm Productivity & Unit Labor costs data. Dovish forward guidance from ECB will result in the EURUSD pair seeing further sharp decline while a neutral tone from ECB will result in price action being influenced by Brexit updates and strength of USD in the broad market.

When looking from a technical perspective in the 4 hour intra-day chart, depending on cues from macro calendar events if the pair takes a downside move there will be some level of support at 1.1300 handle which once breached will lead to sharp fall towards the lower end of multi-month wide price range limitations found at 1.1233/1.1211 price range while a move to the upside will lead to pair facing strong resistance near 1.1333 mark which is confluence point of 20 & 100 moving average lines followed by 1.1359 mark which is confluence point of 20 & 50 moving average lines in immediate future.

Please feel free to let us know what you think in the comments below.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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