The direct currency EUR/USD fell from a 3-months high of 1.1257 but yet traded over the 1.1200 before the release of key European Central Bank (ECB) monetary policy decision. However, the reason for the currency pair selling bias could be attributed to the broad-based U.S. dollar strength triggered by the intensifying US-China tussle. The optimism about Germany’s stimulus agreement and hopes of the ECB additional stimulus underpinned the shared currency.
The EUR/USD is holding around 1.1221 and consolidating in the range between 1.1211 and 1.1241. However, the traders are keenly awaiting the European Central Bank (ECB) monetary policy decision to place any strong position.
At the USD front, the broad-based U.S. dollar reported gains on the day and turned out to be one of the key factors that kept a lid on any additional benefits in the currency pair, at least for now. However, the investors preferred to invest in safe-haven assets, mainly due to the US-China intensifying tension.
Besides, the ECB is broadly expected to inject approximately EUR500 billion to its Pandemic Emergency Purchase Programme (PEPP), in an effort to accommodate the coronavirus-affected economy, whereas the German coalition parties agreed a 130 bln euro stimulus package, which initially boosted the risk-on sentiment.
The further losses in the currency pair could be possible as the extra stimulus is already priced in by the markets. In the meantime, the upbeat U.S. jobs data will likely boost the broad-based U.S. dollar and could collaborate with EUR/USD’s selling bias.
Daily Support and Resistance
S1 1.1078
S2 1.1152
S3 1.1193
Pivot Point 1.1226
R1 1.1267
R2 1.13
R3 1.1374
The single currency Euro is trading in selling mode around 1.1200 level as the technical indicators are suggesting strong odds of bearish retracement in the pair. The RSI is holding over 80, and the RSI MA has just started coming out of the overbought zone, which suggests initiation of bearish correction/retracement in the EUR/USD pair. The EUR/USD may drop and find support around 1.1118 level while resistance holds around an intraday resistance level of 1.1230 level today. Good luck!