EUR/USD Trades Under Pressure - Eyes On ECB Monetary Policy Decision! 

The EUR/USD currency pair failed to stop its previous day sluggish trading bias and remain flat around just above 1.1800 level as all traders keeping their eyes on the European Central Bank (ECB) Monetary Policy Decision. However, the modest bearish bias around the currency pair could be the renewed Brexit tensions, which tend to undermine the shared currency and contribute to the currency pair losses.

On the other hand, the broad-based U.S. dollar strength, backed by the upbeat U.S. labor market report, also keeps the currency pair under pressure. Across the pond, the ECB's concerns over the exchange rate also keep the shared currency under pressure. Also dragging the currency pair down could be fears of on-going coronavirus cases in Spain, France, and German. At the moment, the EUR/USD currency pair is currently trading at 1.1816 and consolidating in the range between the 1.1795 - 1.1828. The market traders seem reluctant to place any strong position as they prefer to wait ahead of the European Central Bank (ECB) monetary policy decision.

The ECB is expected to remain on hold on Thursday, while the central bank will likely show concern regarding EUR's recent strength and its deflationary impact. Last week, the central bank's Chief Economist Philip Lane stated that the exchange rate matters for monetary policy. EUR/USD has recovered by over 5% this quarter alone and recently hit a multi-year high above 1.20. However, these Lane's comments dragged the shared currency from a two-year high and reached the beginning of September.

Also weighing on the currency pair could be the fresh concerns regarding the U.K.'s divorce deal with the European Union. It is worth mentioning that the U.K.'s Prime Minister Boris Johnson was preparing a law to modify parts of the Brexit deal signed in January. This eventually urged the European Union to warn that there would be no trade deal if the U.K. unilaterally tinkers with the divorce treaty over the Brexit deal.

At the coronavirus front, the sharp rise in the coronavirus cases in Spain, France, and German keeps the worries over the economic recovery on the cards. It is very downhearted headlines that the second wave of the virus is picking up Europe's pace again amid the summer holidays.

At the USD front, the broad-based U.S. dollar extended its bullish bias and took some bids on the day, perhaps due to the little progress on the COVID-19 stimulus package. The gains in the U.S. dollar were further supported by Friday's U.S. job data, which showed a dip in the unemployment rate and a rise in U.S. Treasury yields. However, the U.S. dollar gains could also be a key factor that kept the currency pair under pressure. Whereas, the U.S. Dollar Index, which tracks the greenback against a basket of other currencies, rose by 0.13% to 93.168 by 9:53 PM ET (2:53 AM GMT).

In the absence of the major data/events on the day, the market traders will keep their eyes on the German Trade Balance (July) and the Eurozone Employment Change and second-quarter gross domestic product. The risk catalyst like geopolitics and the virus woes, not to forget the Brexit, will also be key to watch for the fresh direction.



Daily Support and Resistance

S1 1.175

S2 1.1788

S3 1.1801

Pivot Point 1.1825

R1 1.1839

R2 1.1863

R3 1.19

The EUR/USD is trading sharply bearish at 1.1785 level, and it may break below the support area of 1.1780 level. If this happens, we may see the EUR/USD prices dropping until the next support area of 1.1706 level. The 50 periods EMA and the RSI holding below 50 suggest strong odds of selling in the market. Let's consider taking a selling trade below 1.1780 level today. Good luck!

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