The EUR/USD pair just met dynamic resistance given by the projected neckline of a head and shoulders pattern. The 1.17 level proved to be too strong a support for the pair to break it, and now it is up almost four big figures.
One way to look at the recent EUR/USD rise is through the eyes of the ECB. The central bank misguided investors at its last press conference. It promised a significant increase in the PEPP purchases, but that increase did not come.
As such, traders took the ECB statement as a bluff, and so the euro’s rise is not surprising. Moreover, the central bank’s credibility is at stake, as there is clearly a conflict inside the Governing Council that we do not know about.
Two days ahead of the ECB meeting, the euro remains bid on all fronts. That is particularly true in the case of the U.S. dollar, sold across the board recently.
EUR/USD Technical Analysis
Bears may want to sell at dynamic resistance against the highs. If the market reacts and the EUR/USD pair does move lower, bears may want to add to their position on a break of the pattern’s neckline. As for the measured move, it is far away to warrant a risk-reward ratio bigger than 1:2.