Euro remains in extended range and awaiting Lagarde’s comments for fresh signals
The Euro is holding in red in European session on Thursday and pressuring again key Fibo support at 1.1079 (61.8% of 1.0981/1.1239) which continues to limit the downside.
Near-term action remains in directionless mode for the fourth consecutive day and entrenched within narrow range around 1.11 handle, awaiting stronger direction signal.
Strong Fibo support at 1.1079 is reinforced by the base of rising daily cloud / bull trendline / 100DMA (1.1070) and providing strong obstacle to larger bears off 1.1239 high, which need firm break here to generate continuation signal.
Daily studies are overall negative but oversold stochastic keeps losses limited for now.
On the other side, holding above 1.1079/70 support zone would keep the pair in extended neutral mode, but would also keep the risk of reversal as bear-trap pattern is forming on daily chart, but needs confirmation on bounce through 200DMA (1.1032).
The ECB policy meeting is key event for the single currency today, with wide expectations to keep policy unchanged.
Traders will focus on comments from President Lagarde, who is expected to launch a broad review the policy and likely to redefine central bank’s main goal and the way to reach it, in the action that hasn’t been seen since 2003.
Markets will closely watch Lagarde’s comments about inflation target to get more clues whether she will continue the policy of her predecessor Mario Draghi, as current ECB’s inflation target is below 2%, with expectations that Lagarde may increase target to 2%.
The outcome of today’s meeting is likely to provide fresh direction signals for the Euro and eventual emerge from current congestion.
Res: 1.1099; 1.1105; 1.1132; 1.1152
Sup: 1.1079; 1.1070; 1.1041; 1.1000