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The pair EUR/USD has risen throughout the last week, before softening on Friday, the traders have avoided committing too strongly to the rise before the ECB meeting this week, which should lead to a rate cut.
All eyes turn to the ECB this week
The decision of the ECB, and the details of the speech of his boss, Mario Draghi, will be in effect without any doubt the critical events for the Euro this week.
In this regard, it should be noted that in a note published today, analysts at Danske Bank note :
“We expect that the ECB announced a decrease of 20 basis points in the deposit rate and that the forward guidance remains unchanged, with a recovery on a 12-month QE at a rate of 45-60 billion euros per month, while recognizing the downside risks”.
However, it should be noted that the bank displays here a rather settled. Other analysts believe that the ECB will lower rates by 10 basis points, and many are those who doubt that the ECB will raise the QE, at least as of now.
Thus, and given the fact that the market is already almost certain that the ECB will lower the deposit rate of at least 0.10%, it is not excluded that the Euro goes up in the face of the announcements of the central bank, if market expectations are not exceeded.
ING (AS:INGA) envisages a fall of the EUR/USD at 1.07
For its part, the ING bank was more focused on the consequences of the trade war on the EUR/USD in its analytical note released today, announcing a reduction in its price target on the Euro :
“The continuation of the deterioration of trade relations between the United States and China will result in a decline of the euro. But there is also a non-negligible risk that the United States impose, or at least threaten to impose tariffs on the exports of the euro area. Such rates should weigh on the euro.”
The bank is now a decline of the EUR/USD at 1.07 to horizon 3 months, before a rebound to 1.13 for the next 12 months.
Technical factors to monitor in the short term on the Euro-Dollar
From a graphical point of view, the highlight of the last week is the fact that the EUR/USD pair has confirmed a line of downward trend visible since the 13th of August, and that is to be regarded as immediate resistance (now at 1.1065).
However, a break above 1.11 seems necessary to consider that the chances of decline are decreasing. Beyond that, 1.1160-65 and 1.12 will be the sprochaines resistance the key to to monitor.
The downside, the moving averages 100 and 200 hours to form an immediate support to 1.1020, just before the threshold of major psychological of 1.10.
Below this threshold, the dominance of the sellers would be confirmed, and a fall to the recent lows annual area of 1.0925 would be possible.