EUR/USD pressured ahead of ECB
Kira Iukhtenko, FX BAZOOKA analyst
EUR/USD entered a short-term bearish channel this week, slipping from the Friday’s high of $1.3820 towards the $1.3700 mark on Wednesday. Better-than-expected euro zone’s January retail sales (+1.6% m/m) and in-line Q4 GDP (+0.3% q/q) couldn’t really diminish the selling interest in the pair.
The bearish pressure on the pair is mounting ahead of the ECB policy meeting on Thursday (12:45 GMT – rate announcement; 13:30 GMT – Draghi’s press conference). According to the most recent Bloomberg survey, a quarter of economists expect the ECB to lower rate by 0.25%. Others are convinced the bank doesn’t need to ease as the recent data on growth, inflation and economic sentiment are all exceeding estimates. The ECB will also announce its inflation projections until the year 2016 – perhaps this is the most important aspect of the tomorrow’s meeting.
Pay special attention to the US data today: ADP payrolls (forecast: +130K), services ISM (forecast: 53.6) and the Beige Book.
The pair is now trading in a wait-and-see mode, holding a few pips above the $1.3700 mark. $1.3710 level (61.8% Fibo of the latest rise) is an immediate support for the euro, followed by $1.3680 and $1.3640.
Chart. H4 EUR/USD