EUR/USD: Probing 100-hour MA ahead of the ECB
|- EUR/USD is looking to break above the 100-hour MA resistance at press time.
- The ECB is expected to keep rates unchanged at -0.5%.
- President Draghi will likely justify September's stimulus package, sending the EUR lower.
- The downside looks limited as the ECB's stimulus has been priced in.
EUR/USD is struggling to beat the 100-hour moving average (MA) hurdle at 1.1140 ahead of the European Central Bank (ECB) rate decision, which will be the last with Mario Draghi as President.
The central bank cut rates by 10 basis points to -0.5% in September and announced a fresh round of asset purchase program.
The ECB has very little reason to change its stance at Thursday's meeting, as the recent macro data releases have been anything but positive. That said, the ECB board members were divided on the need to revive bond purchases, according to the minutes of the September meeting.
Draghi will likely downplay reports of internal divergence at the ECB and validate the September stimulus by stating that the unconventional measures did have a significant impact on growth and inflation over the last few years.
That could weigh over the EUR, however, the downside looks limited, as September's stimulus has been priced in. Further, the markets now are more interested in knowing the possible changes in 2019 and 2020 under incoming President Christine Lagarde.
The ECB's rate decision is scheduled at 11:45 GMT and Draghi will hold the press conference at 12:30 GMT. The pair could also take cues from the US Durable Goods orders due at 12:30 GMT and the Eurozone and German preliminary Manufacturing PMIs scheduled for release in the European session.
A weaker-than-expected US data would bolster the dovish Federal Reserve (Fed) expectations, possibly sending the US Dollar lower across the board. Note that the markets are expecting the Fed to cut rates by 25 basis points on Oct. 30.
Technical levels
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