Range narrows ahead of ECB, multiple upside failures warn of reversal
The range is narrowing as markets await main event of this week, Thursday’s ECB policy meeting.
The central bank is expected to ease further (10BPS to -0.5%) with focus on continuation of asset purchase program.
Market expectations on stimulus are split, as some expect Mario Draghi in one of his last acts as ECB President, to increase asset purchase and support EU’s weak economy and inflation, while others expect no surprise.
Euro bulls face very strong headwinds, following four consecutive failures at pivotal Fibo barrier at 1.1049 (38.2% of 1.1249/1.0925), with upticks being repeatedly capped by falling 20DMA (currently at 1.1057).
Multiple upside rejections warn of recovery stall and fresh weakness, which requires firm break of pivotal supports at 1.1015/00 (low of near-term congestion / psychological) to generate bearish signal.
Conversely, lift and close above Fibo barrier and 20DMA would boost bullish bias and open way for further advance.
ECB is eyed for fresh direction signals.
Res: 1.1049; 1.1057; 1.1087; 1.1094
Sup: 1.1034; 1.1015; 1.1000; 1.0986