Traders Wait For ECB Commentary
EUR/USD is currently trying to get back above 1.1800 while the U.S. dollar is mostly flat against a broad basket of currencies.
The U.S. Dollar Index is testing the support level at 92.80. If this test is successful, the U.S. Dollar Index will head towards the next support level at 92.40 which will be bullish for EUR/USD.
Today, foreign exchange market traders will focus on ECB Interest Rate Decision. The rate is expected to stay unchanged, but the Bank’s commentary may have a significant impact on currency dynamics.
Recent inflation reports from EU indicated that inflation remained under control, which provides ECB with an opportunity to be very dovish without taking big risks.
The key question for traders right now is whether ECB will rush to say that it would provide more support to markets as Euro Area Inflation Rate is still below 2%.
I’d note that analysts expect that Euro Area Inflation Rate will grow by 2.6% year-over-year in July, but this forecast is well below inflation numbers which are seen in the U.S., so ECB has the opportunity to be aggressive.
EUR/USD managed to settle back above 1.1775 and is trying to settle above the resistance at 1.1800. In case this attempt is successful, it will head towards the next resistance level at 1.1830.
A successful test of the resistance at 1.1830 will lead to the test of the 20 EMA at 1.1840. In case EUR/USD manages to get above this level, it will move towards the next resistance level which is located at 1.1860.
On the support side, the nearest support level for EUR/USD is located at 1.1775. In case EUR/USD declines below this level, it will move towards the next support at 1.1750.
A move below the support at 1.1750 will open the way to the test of the next support at 1.1720. In case EUR/USD gets below this level, it will head towards the next support at 1.1690.
For a look at all of today’s economic events, check out our economic calendar.