EUR/USD stable before the ECB, but a rapid return of the fall seems likely

By David Wagner

After once again marked new lows yesterday, the pair EUR/USD seems to be stabilizing this morning (Thursday), in anticipation of the ECB meeting today. However, several indices suggest that the decline may soon resume.

Certainly, there is little chance that this qoit the ECB, which is weighing on the Euro, because the recent improvement in european economic data (with an index of economic sentiment German ZEW at highest since more than 2 years old in January, according to data this week) tends to exclude the possibility of a position too dovish from the ECB

Slight gains for the Euro may be to predict whether Lagarde stressed that the grass seems a little greener in the euro area since the last meeting of the ECB.

But any rise of the Euro in the face of the ECB meeting might ultimately prove to be a sales opportunity.

In fact, other factors are likely to dampen the single currency, starting with risk aversion and widespread response to the risk of global pandemic associated with a novel coronavirus in chinese, which is spreading more and more these last few days.

In addition, the technical analysis is used to detect many resistances of potential close to current levels, namely :

The moving average 100 hours currently to 1.1093
The psychological threshold of 1.11
The moving average of 200 hours to 1.1115
The summit of this week at 1.1117
The 200-day moving average at 1.1135

In other words, an important catalyst appears to be necessary for the Euro across the area formed by the thresholds mentioned above, and there is little chance that the ECB appears to be sufficiently hawkish to this, Lagarde has probably at heart not to raise expectations of a rate hike for the moment.

If the Euro continues its decline, possibly after a slight rise in the face of the ECB, the low of this week at 1.1070 will be the first potential support before the moving average 100 days to 1.1063. More low, no obstacles will be faced before the psychological threshold of major 1.10, and the lowest at the end of November to 1.0980.