The Euro is trading slightly better shortly before the U.S. opening and the release of the European Central Bank’s interest rate decision and monetary policy announcement.
At 0930 GMT, the EUR/USD is trading 1.2172, down 0.0011 or +0.10%.
The ECB is set to keep policy unchanged, playing down worries over recent softness in the Euro Zone economy and leaving the door open to ending its lavish bond purchase scheme by the close of the year.
Daily Technical Analysis
The main trend is down according to the daily swing chart. The downtrend continued earlier today when sellers took out yesterday’s low.
The EUR/USD isn’t close to turning the main trend to up, but today’s session does begin with the Forex pair in the window of time for a closing price reversal bottom. So watch for a lower-low, higher-close. Better yet for bullish traders, look for a lower-low, higher-close, close above the opening and close above the mid-point of the session. This will be an even stronger sign that the buying is greater than the selling at current price levels.
The main range that we’re working inside is the January 9 bottom at 1.1915 and the February 16 top at 1.2555. Its retracement zone is 1.2235 to 1.2160. Trader reaction to this zone could set the direction of the EUR/USD for the rest of the year.
An additional level to watch is 1.2166. This is a major long-term 50% level.
Daily Technical Forecast
Based on the early trade, the direction of the EUR/USD is likely to be determined by trader reaction to the Fibonacci level at 1.2160.
A sustained move over 1.2160 will indicate the presence of buyers. Overcoming 1.2166 will indicate the buying is getting stronger. This could create the upside momentum needed to challenge the 50% level at 1.2235.
We could see a technical bounce on the first test of 1.2235, but look for an acceleration to the upside if this level is taken out with conviction. The next target is a downtrending Gann angle at 1.2273.
A sustained move under 1.2160 will signal the presence of sellers. This could drive the EUR/USD into a steep downtrending Gann angle at 1.2133.
Crossing to the weak side of the angle at 1.2133 could trigger a break into a long-term uptrending Gann angle at 1.2110. We could see a further collapse if this angle is violated.