EUR/USD: on the eve of the ECB meeting
17/01/2020
Since the opening of today's trading day, the EUR / USD pair has been trading in a narrow range on the eve of the publication of the ECB's decision on rates.
At the beginning of today's European session, the EUR / USD pair is trading near 1.1090, below strong short-term resistance levels of 1.1108 (ЕМА200 on the 1-hour chart), 1.1115 (ЕМА200 on the 4-hour chart).
Below the key resistance level of 1.1150 (ЕМА200 on the daily chart), the long-term negative dynamics of EUR / USD remains, which speaks in favor of short positions.
At the same time, the ECB leadership today may announce an increase in inflation expectations and reiterate that it is "closely monitoring the potential side effects" of negative interest rates on the economy.
The ECB's decision on rates will be published at 12:45 (GMT), and the press conference will begin today at 13:30 (GMT). A sharp increase in volatility is likely to occur during this period of time, especially if unexpected statements regarding the monetary policy of the bank are followed by ECB management. Negative interest rates are likely to continue for some time to come, but the ECB may revise them at some point.
Any statements by the ECB management that may indicate the possibility of moving away from the bank’s extra-soft monetary policy towards tightening it will be regarded by market participants as a signal to resume purchases of the euro, which will also cause the EUR / USD pair to grow.
In this case, after the breakdown of the resistance level, 1.1150 EUR / USD will go towards the resistance levels 1.1205, 1.1285 (Fibonacci level 23.6% of the upward correction to the fall of the pair from 1.3870 in May 2014 to 1.0480 reached in March 2015). A signal for the implementation of this scenario will be a growth into the zone above the resistance level of 1.1115.
The breakdown of the local support level of 1.1064 may provoke a deeper decline in EUR / USD.
Support Levels: 1.1064, 1.0995, 1.0940, 1.0900
Resistance Levels: 1.1108, 1.1115, 1.1150, 1.1205, 1.1240, 1.1285
Trading Recommendations
Sell Stop 1.1060. Stop-Loss 1.1115. Take-Profit 1.1000, 1.0940, 1.0900
Buy Stop 1.1115. Stop-Loss 1.1060. Take-Profit 1.1150, 1.1200, 1.1240, 1.1285
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