Forex Watchlist: EUR/USD’s Range Support at 1.1000

Looking for a pair to trade during the ECB event? Here’s a short-term forex setup that you might want to look at!

The ECB’s monetary policy decision is only a few trading sessions away, folks! Like many of you, I’m also keeping close tabs on possible setups on the euro.

EUR/USD’s range on the 1-hour chart caught my attention because the pair is about to hit its support. Not only that, but the support also seems to line up with the 1.1000 major psychological handle. Oh, and look at stochastic almost hitting the oversold area! Coincidence? I think not!

EUR/USD: 1-hour Forex Chart

EUR/USD: 1-hour Forex Chart

I think a short-term setup is a good idea to look at especially since not many are expecting any game-changing… well, changes from the ECB’s monetary policy decision this week. According to Forex Gump’s ECB trading guide, Mario Draghi and his gang are likely to copy the RBA and BOE’s wait-and-see stance and hold off any changes until the post-Brexit batch of reports trickle in.

If the ECB does hold off any more additional stimulus and EUR/USD behaves like it had in the last two policy decisions, then we’ll likely see upward spikes at the announcement. The devil is in Draghi’s press conference though.

There’s a big chance that ECB head honcho will take his time on the stage to hint at more easing in the next few months and communicate the ECB’s concerns over the euro zone’s growth and inflation trends. Then again, he could also attempt to reassure the markets that the ECB has its affairs in order by surprising us with less-dovish-than-expected remarks.

Either way, I’m keeping my eye on a possible short-term bounce from the 1.1000 MaPs. If the pair continues to consolidate at the level even after the ECB’s presser, then we could be looking at a 150-pip bounce opportunity from this range. On the other hand, a downside breakout could open up a break-and-retest scenario and possibly the start of a longer-term short to the 1.0850 or even the 1.0550 area.

What do you think? Will the euro bulls defend the 1.1000 level this week? Or will the bears step in and and start a longer-term downtrend?

XOXO,

Huck

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