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EUR/USD: Focus on ECB, dovish talk likely priced in

  • EUR/USD is showing signs of life ahead of the ECB
  • The European Central Bank (ECB) is sound dovish, acknowledge deterioration in growth. 
  • Markets seem to have priced in the potential dovish turn by the ECB. 
  • The EUR/USD pair is currently trading at 1.1388, having hit a three-week low of 1.1336 earlier this week. The currency pair could rise above 1.14 ahead of the European Central Bank (ECB) rate decision, the flag breakout on the 15-minute chart indicates. 

The central bank is expected to keep policy unchanged today and acknowledge the recent slowdown in the biggest economies of Eurozone - Germany, France, and Italy. 

The central bank could also downgrade the bank's economic assessment, arguing that growth risks are now tilted to the downside.

That would imply a dovish turn, something which markets seem to have anticipated and priced well in advance. 

Moreover, the rate markets pushed back expectations of the deposit rate hike to mid-2020 in the first week of this month. Further, EUR/USD has dropped more than 200 pips in the last three weeks. 

As a result, the downside in the EUR could be limited, unless Draghi uses strong words while describing downside risks to the economy, bolstering hopes of policy easing. 

Also, the common currency will likely fly high if Draghi refrains from downgrading the risk assessment. The central bank head may do that as downgrading the risk assets may raise hopes of monetary stimulus, complicating the process of policy normalization. 

EUR/USD Technical Levels

EUR/USD

Overview:
    Today Last Price: 1.1389
    Today Daily change: 0.0007 pips
    Today Daily change %: 0.06%
    Today Daily Open: 1.1382
Trends:
    Daily SMA20: 1.1426
    Daily SMA50: 1.1391
    Daily SMA100: 1.1456
    Daily SMA200: 1.1589
Levels:
    Previous Daily High: 1.1396
    Previous Daily Low: 1.1351
    Previous Weekly High: 1.1491
    Previous Weekly Low: 1.1353
    Previous Monthly High: 1.1486
    Previous Monthly Low: 1.1269
    Daily Fibonacci 38.2%: 1.1378
    Daily Fibonacci 61.8%: 1.1368
    Daily Pivot Point S1: 1.1357
    Daily Pivot Point S2: 1.1331
    Daily Pivot Point S3: 1.1312
    Daily Pivot Point R1: 1.1402
    Daily Pivot Point R2: 1.1421
    Daily Pivot Point R3: 1.1447