The EUR/USD is trading higher as we approach the start of European Central Bank President Mario Draghi’s press conference at 1145 GMT. Despite the early strength, there are worries that policymakers may strike a cautious tone about the currency’s value.
About a month ago, a little more than half of the respondents to a Reuters poll believed the European Central Bank would announce a reduction of its monthly asset purchases. Going into today’s report, only 15 of 66 economists expect the ECB to make this announcement.
The main trend is up according to the daily swing chart. A trade through 1.2070 will signal a resumption of the uptrend. This could drive the EUR/USD into the major 50% level at 1.2166.
A trade through 1.1823 will turn the main trend to down with 1.1661 the next major downside target.
The short-term range is 1.2070 to 1.1823. Its retracement zone at 1.1947 to 1.1976 is currently being tested. Investor reaction to this zone will tell us if the buyers or sellers are in control today. Sellers are going to try to produce a potentially bearish secondary lower top. Buyers are going to try to drive the market through this zone in an effort to take out 1.2070.
The intermediate range is 1.1661 to 1.2070. If sellers are successful at 1.1976 to 1.1947 then we could see a pullback into the intermediate retracement zone at 1.1866 to 1.1817.
If the trend changes to down on a move through 1.1823 then we could see an eventual break into the major retracement zone at 1.1611 to 1.1540.
Based on the current price at 1.1978 and the earlier price action, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the retracement zone at 1.1947 to 1.1976.
A sustained move over 1.1947 will indicate the presence of buyers. This could create enough upside momentum to challenge 1.2070 then 1.2166.
A sustained move under 1.1947 will signal the presence of sellers. This could drive the market into 1.1866, 1.1823 and 1.1817.
Look out to the downside if 1.1817 fails as support.