The ECB is to announce its interest rate decision today and is widely expected to remain on hold, as currently EUROIS imply a probability for the bank to remain on hold at 97.61%. ECB at its last meeting also stated that there should be no rate hike through summer 2019. On the financials, a comment about inflation could be expected, as it is at the bank’s target of 2%, however core inflation dropped somewhat. Also some comments about trade uncertainty and the unwinding of its QE program would not be a surprise. Should there be a more dovish tone in the accompanying statement we could see EUR weakening.
EUR/USD rose yesterday aiming for the 1.1745 resistance level, after news that US President Trump and EU Commission president Juncker reached a preliminary agreement to start negotiations. In order for our sideways direction bias to be lifted we would require the pair to clearly break the 1.1745 resistance level, signaling a possible start of an upward trend. On the other hand, the pair could experience some bearish tendencies should the ECB interest rate decision contain dovish elements. Should the pair come under selling interest we could see it breaking the 1.1640 support line, opening the way for the 1.1580 support barrier. On the other hand, should it find extensive buying orders along its path we could see it breaking the 1.1745 support line and aim for the 1.1830 resistance level.