ECB Interest Rate Decision

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.

Trump meets with EU’s Juncker

US president Trump is to meet with European Commission President Juncker, later today in Washington. The meeting is expected to focus on the US tariffs on steel and aluminium as well as their extension to European cars. The main aim of president Juncker is expected to be a de-escalation of the trade tensions between the two large economies. Analysts state that a potential escalation could hurt the risk sentiment of the market for USD, not only against EUR but against JPY as well.

EUR/USD remained in a sideways movement, as analysed yesterday, well between the boundaries of the 1.1745 resistance line and the 1.1640 support line. We could see some relatively increased volatility on the pair today should the Trump-Juncker meeting display progress, however currently we retain our sideways bias. Technically, it would be evident to note that the RSI indicator in the 4 hour chart remained near the reading of 50, implying an indecisive market. Should the bulls lead the charge in the pair’s direction we could see it breaking the 1.1745 resistance line and aim for the 1.1830 resistance hurdle. Should on the other hand the bears be in the driver’s seat, we could see the pair breaking the 1.1640 support line and aim for the 1.1580 support barrier.

Trade wars: Alliances forming?

Amid fears over a possible trade war, China seems to be reaching out for Europe as it pledges to open further it’s economy. Chinese officials recently stated that “China and EU, now have a common stance against unilateralism and upholding the World Trade Organization”. In other headlines, it seems to be the case that Germany is approaching France in an effort to overhaul EU relationships. Also, EU commission president Juncker stated that the bashing of Russia must stop, implying that a process for the normalization of the EU-Russian relationships could begin. Should there be any further positive headlines about the EU we could see the common currency strengthening.

EUR/USD traded in a sideways manner on Friday and during today’s Asian morning between the 1.1715 resistance level and the 1.1640 support line. The pair could continue to trade in sideways manner, however we might see some bullish tendencies as the financial releases today might favor the EUR and weaken the greenback. Should the pair come under buying interest we could see it breaking the 1.1715 resistance line and aiming for the 1.1820 resistance level. Should the pair come under selling interest we could see it breaking the 1.1640 support line and aim for the 1.1550 support hurdle.