With the ECB gearing up to make its policy statement, I’m looking out for additional volatility on EUR/USD.
Will it find resistance at a nearby area of interest?
Before we talk setups, lemme show you the major headlines in the previous trading sessions:
- U.S. gov’t $1.9T stimulus plan gets vote of approval from House
- Australia unveiled $928M pandemic support for tourism industry
- Australia’s MI inflation expectations improved from 3.7% to 4.1%
- U.K. RICS house price balance up from 49% to 52%
Upcoming Potential Catalysts on the Economic Calendar:
- ECB monetary policy statement at 12:45 pm GMT
- ECB press conference at 1:30 pm GMT
- U.S. initial jobless claims at 1:30 pm GMT
What to Watch: EUR/USD
I’m seeing a textbook break-and-retest play on the short-term chart of EUR/USD!
Price still has a lot of room to climb before pulling up to the broken support around the 1.2000 mark, but I think today’s ECB decision could bring in enough volatility.I’ve got my eyes locked on this particular level since it lines up with the 61.8% Fib and is a major psychological level. A shallow pullback could already find sellers at the 50% Fib that lines up with the 200 SMA dynamic inflection point or even the 38.2% level at 1.1940.
Are bears likely to stay in control?
Technical indicators seem to suggest so! The 100 SMA is below the 200 SMA to reflect the presence of selling pressure while Stochastic is indicating exhaustion among buyers.
Besides, many are expecting the ECB to reiterate that they’re watching bond yields closely and that they will not hesitate to bust out their monetary policy tools if the situation calls for it.
Meanwhile, the U.S. currency could stay supported thanks to the vote of approval for Biden’s massive stimulus plan. After all, this could mean a big boost for businesses and consumers (Woohoo, more stimmy checks!) in the coming months.
