Forex News: The pair tested resistance yesterday but bounced lower despite a worse than expected value of the American Consumer Price Index. This just goes to show that the US Dollar is starting to gain momentum against the Euro.
The resistance at 1.0945 was surpassed yesterday and price came in close vicinity of 1.0980 but bounced lower. If the uptrend line seen on the chart above and the 50 period Exponential Moving Average are clearly broken, we expect the pair to move below 1.0870 and closer to 1.0800. As an alternate scenario, a bounce at the trend line would suggest another encounter with resistance.
The ECB will announce today at 12:45 pm GMT the interest rate, which is not expected to change from the current 0.05% but the likelihood of strong movement is high nonetheless. At 1:30 pm GMT ECB President Mario Draghi will hold the usual press conference, explaining the reasons behind the rate decision and answering journalists’ questions. This event will probably create the biggest volatility of the day but the direction will depend on Draghi’s attitude and answers.
The British unemployment numbers showed yesterday that less people applied for social help and the pair slightly retraced higher. However, this can also be attributed to the recent strong drop that was in need of a rebound.
The bearish trend found short term support at 1.4125 and we expect the pair to move higher, possibly into 1.4230. If this potential resistance will not stop the climb, the 50 period Exponential Moving Average will be the next turning point where downwards movement may resume. The oscillators are starting to move above their respective oversold levels and this increases the chances of a deeper retracement to the north.
The United Kingdom didn’t schedule major news releases for today so the pair’s direction will be mainly dependant on the technical aspect.