EURUSD Tests Trendline Resistance Ahead of ECB Rate Decision

Forex Focus

EURUSD is trading lower in this morning’s Asian session ahead of a full schedule today. The currency pair is leading losses among the majors as it is currently down by 0.17% at 1.0856.

Investors are mostly squaring up their positions and reducing their risk ahead of the ECB meeting due later today at 12:45 pm GMT. With the central bank already raising its quantitative easing program and launching a 750 billion EUR Pandemic Emergency Purchase Programme (PEPP), the consensus is that there will be no changes announced. The ECB will likely use this meeting to look back on its measures and reflect on their impact amid the coronavirus pandemic.

With this, market participants will be looking for clues as to how long monetary policy will remain easy. 

Prior to the interest rate decision, the French GDP for Q1 2020 is due at 6:30 am GMT. It is expected to come in at -4.0%. Then at 7:00 am GMT, the German retail sales is eyed at -8.1%. At 8:55 am GMT, the German unemployment change report is forecasted to print at 75,000 for March.

Then at 10:00 am GMT, the preliminary reading of Germany Q1 GDP is anticipated at -3.7%. Along with this, the region’s CPI report for March is seen at 0.1%. Meanwhile, the core version of the report is eyed at 0.7%.

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EURUSD Outlook

On the 4-hour time frame, it can be seen that EURUSD is testing a confluence of resistance. It current price level, around 0.1860, coincides perfectly with the falling trend line (when you connect the highs of March 27, April 14, and April 28). It’s also worth noting that the 100 SMA and 200 SMA coincide around this price level.

Reversal candlesticks could confirm the bearish assumption that EURUSD is headed lower to its April 24 lows at 1.0726. On the other hand, a strong close above the 1.0900 handle would invalidate the falling trend line. Instead, it could suggest that EURUSD is on its way to trade higher with near-term resistance at 1.0991.

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