EURUSD Looking for an Additional Bullish Leg

The venerable Eurodollar has faced some uncertainty over the past few days as the market speculates as to whether the ECB will extend their QE program. Subsequently, the currency has faced a slide after failing to breach the high at 1.1493 which has seen it decline back towards the 100-day moving average. However, the Euro is facing a range of buoyant conditions that could see the pair challenge the 1.1460 level in the coming days.

Price action has also recently broken through the minor trend line resistance at 1.1350, which confirms a weak bullish trend, and is currently supported by the 100-Day moving average. The RSI oscillator, having recently declined sharply, is now starting to trend higher within neutral territory indicating that there is plenty of fuel for any bullish move. However, weak resistance exists at 1.1384 that the Euro will need to surmount to move higher.

Subsequently, given price action’s current position, it would appear a reasonable proposition to retain a bullish target of 1.1460. This resistance level represents the swing high from the middle of September and an area where price action would remain constrained within the short term channel.

However, the risk event looming upon the horizon is the ECB’s monetary policy committee’s upcoming meeting. The market will be watching the requisite outcome for any sign of dovishness or extension to the current QE program. It would appear that the likely outcome is more of the same from the ECB as statements from committee members seem to imply a level of comfort with the current QE injections. However, any surprise decision from the meeting could send the common currency reeling, so monitor the released statements closely.

Ultimately, the current setup on the 4-hour chart provides for a relatively tight stop with plenty of potential to play the bullish swings up towards 1.1460, which also represents the 38.2% Fibonacci level. In the event of a downside move, minor support is located around the 1.1320 mark and any subsequent break below would target the 1.1300/1.1260 levels.