EUR/USD Forecast: Holding around 1.1800 ahead of ECB’s decision

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1805

ECB policymakers are confident about economic recovery ahead of the central bank meeting.
Equities ended the day with substantial gains, providing further support to the shared currency.
EUR/USD could extend its decline sub-1.1700 if the recovery keeps stalling ahead of 1.1840.

The EUR/USD pair recovered from a 4-week low at 1.1752, to end this Wednesday with modest gains a handful of pips above the 1.1800 figure. The market’s sentiment was sour for most of the day, as AstraZeneca and the Oxford University announced they paused trials for its coronavirus vaccine amid “an unexplained illness” in one participant. The dollar changed course against all major rivals following news indicating that some ECB policymakers have become more confident in their forecasts for the region’s economic recovery, potentially reducing the need for more monetary stimulus this year. Also, equities put a halt to their latest rout, with Wall Street recovering nicely.

The macroeconomic calendar was scarce, as it only included the US JOLTS Job Openings, which were up in July 6.618M, better than the 6M expected. This Thursday, the focus will be on the ECB. The central bank is widely expected to maintain the status quo, and there’s some speculation that today headlines were a way to soften the impact of a not that dovish statement.

EUR/USD short-term technical outlook

The EUR/USD pair peaked at 1.1833, but the intraday spike fell short of suggesting further gains ahead. The 4-hour chart shows that the pair keeps developing below all of its moving averages, with the 20 SMA heading lower below the larger ones. Technical indicators, in the meantime, recovered from their daily lows, but lost directional strength within negative levels. The pair would need to accelerate above 1.1840 to turn bullish, while renewed selling pressure below 1.1760 while likely result in a steeper decline sub-1.1700.

Support levels: 1.1760 1.1710 1.1680

Resistance levels: 1.1840 1.1880 1.1925

View Live Chart for the EUR/USD

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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