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Range was extended today
The EURUSD is setting up between the 100 and 200 hour MAs ahead of the ECB decision (7:45 AM ET/1245 GMT), and Draghi presser tomorrow (8:30 AM ET/1330 GMT). Ahead of the decision, the PMI data for France, Germany and EU will be released.
The ECBs forward guidance to keep rates at current levels till after the summer of 2019 – at least for now. The risks are tilted to the downside as a result of lower growth globally. Trade tension and Brexit uncertainty are risks. Inflation is also lower thanks to oil.
With risk to the downside increased, the plan to raise rates in 2019 is in jeopardy. Draghi may be be pushed on that topic in the Q&A. He is likely to respond with the “data dependent” response. It is too early for him to throw in the towel right now.
Technically, the pair opened the NY session in a 22 pip trading range. Yesterday, the price traded to the lowest level since January 3rd. In the process a lower trend line was tested and held. The rise today did take the price above the 100 hour moving average (blue line in the chart above). The high today extended to a new week high at 1.1394, but fell short of the 200 hour MA at 1.14022. The high from last Friday reached 1.1410 and highs from January 16 also stalled near that level. That area would need to be broken and stay broken on more hawkish move (or a squeeze).
ON the downside, a move back below the 100 hour MA would tilt the bias back to the downside. The lower trend line – which stalled the fall yesterday (red circle 3) - comes in at 1.1325 currently (and moving lower). It will be lower tomorrow but a break would be more bearish.
The range for the week so far is only about 59 pips from the low to the high. That is not a lot. So expect (anticipate) a move outside the narrow range.