Reuters is quoting sources close to the situation as saying that despite comments by the ECB board members, the bank is not likely to cut its policy rate. The reasons provided are the lack of additional benefits from such action.
A policymaker is said to have told Reuters that ECB’s focus is more on financing conditions and less on the exchange rate, suggesting that the ECB would be comfortable with more Euro appreciation.
The situation has calmed selloff fears on the Euro and has propped up the EUR/USD on the day.
Technical Outlook for EUR/USD
Price is up 0.24% on the day, as bulls take in the Reuters report and act on the expectation that the ECB will not be cutting rates; a Euro-positive situation. The bullish push is aiming for 1.21685, and a break above this level targets the 1.22661 resistance. Restoration of the uptrend requires that the EURUSD closes above the 1.23302 price level, which was the previous high obtained on 6 January.
On the flip side, a rejection and pullback from the 1.21685 resistance could bring in downside targets at 1.20890 and 1.20549 into the picture. Further decline below these levels send the EUR/USD to sub-1.20000 levels.
EUR/USD Daily Chart