The EUR/USD is holding steady ahead of the ECB interest rate decision scheduled for later today. The pair has risen by almost 1% in the past few days to the current 1.1935 level.
ECB decision: The ECB will conclude its two-day meeting today and deliver its verdict about the state of the economy. Analysts believe that the central bank will leave every tool, including interest rates and quantitative easing policies, unchanged.
Still, they will also be focusing on the press conference that will follow. Particularly, they will want to see more details about the bank’s views about the ongoing performance of the bond market.
The ECB has recently slowed the pace of its bond purchases even as yields in most European countries has risen. For example, its bond holdings increased by 11.9 billion euros last week, down from 12 billion a week earlier. On average, the bank has been buying bonds worth more than 18.1 billion euros worth of bonds weekly. Signs of more tightening could lift the EUR/USD.
What else: The EUR/USD is also reacting to the mild increase of consumer prices last month. The headline inflation rose by 1.7% last week, in line with expectation. While this increase was notable, it was below the runaway inflation that some analysts were expecting. Later today, the EUR/USD will react to the latest US jobless claims data.
The four-hour chart shows that the EURUSD price has bounced back lately. It has risen from last week’s low of 1.1833 to today’s high of 1.1928. It is still a few pips below the important resistance level at 1.1950. Notably, it has also moved slightly above the 25-period and 15-period exponential moving averages.
Therefore, the pair may keep rising today as bulls target the next key resistance level at 1.1950. However, another retest of last week’s low at 1.1.1835 should not be ruled out.