The EUR/USD pair advanced modestly during the Asian session, up to the higher end of its latest range, hovering around 1.0790 ahead of the ECB decision. The dollar is generally lower across the board, undermined by better-than-expected Chinese November trade balance figures. Despite the surplus shrank in USD terms from $49.06B to $44.61B, exports soared by 5.9% against a 5.0% decline expected, while imports rose by a whopping 13.0%, well above the 1.3% decline expected.
As for the ECB, the Central Bank is largely expected to extend the end date of its stimulus program, from current March 2017, for at least six months, to September 2017. Rates are expected to remain unchanged, as well as bonds' purchasing. A more aggressive stance, with an extension for more than six months, or a rate cut further into negative territory will likely push the EUR lower, while on the other hand, a more conservative decision, will see it extending its gains pass 1.0800 against the greenback.
The EUR/USD pair trades a few pips below the 38.2% retracement of the latest daily decline at 1.0806, the first resistance for the pair. A critical one, however, is the 1.0840/60 region, where the pair bottomed for most of 2015 and current 2016, as moves below the level have proved short-lived. Should the price regain such level, the risk of an upward extension towards 1.0900/50.
The immediate support on the other hand, is the 1.0740 level, with a break below it exposing 1.0690, the 23.6% retracement of the same decline. Below it, the pair will likely resume its bearish trend, furthermore, as market's attention will flip towards the FED's meeting next week with 1.0640 and 1.0570 as the next supports to consider.
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