EUR/USD Forecast: Range-play intact ahead of Thursday's ECB decision

The EUR/USD pair had good two-way moves on Tuesday but struggled to break through a one-week-old broader trading range. The pair initially climbed to test the 1.1645-50 supply zone but quickly ran out of steam amid a fresh wave of US Dollar buying interest. News that China is set to seek permission from the WTO to impose sanctions on the US dented market sentiment and triggered a typical safe-haven flow towards the greenback. Broad-based USD strength was further supported by surging US Treasury bond yields, which kept exerting downward pressure and dragged the pair to an intraday low level of 1.1566. 

The pair did find some support at lower levels, albeit now seemed struggling to move back above the 1.1600 handle and traded with a negative bias through the Asian session on Wednesday. The Euro-zone economic docket lacks any major market-moving economic releases and hence, the release of latest US PPI figures will now be looked upon for some fresh impetus later during the early North-American session. The key focus, however, would be on Thursday's ECB monetary policy meeting, which tends to have a lasting effect on the shared currency and should assist determine the pair's near-term trajectory.

Looking at the technical picture, the pair has been oscillating in a range between the 50% and the 23.6% Fibonacci retracement level of the 1.1301-1.1734 recent upsurge. Hence, it would be prudent to wait for a convincing break through the mentioned range before positioning for the next leg of directional move. Meanwhile, yesterday's rejection slide from above a short-term descending trend-line, forming a part of a bearish triangle chart pattern, points to a near-term bearish bias. However, ahead of Thursday's key event risk, traders are likely to refrain from placing any aggressive bets and should help limit any immediate sharp downside.

Bearish pressure below 38.2% Fibonacci retracement level, near the 1.1565 zone, is likely to aggravate and drag the pair back towards the 1.1530-25 strong horizontal support. A convincing break below the mentioned support would confirm a fresh bearish breakdown and accelerate the fall towards the key 1.1500 psychological mark. A follow-through weakness could further get extended towards 1.1430 intermediate support en-route the 1.1400 handle.

On the flip side, the descending trend-line resistance, currently near the 1.1620-30 region, coinciding with 23.6% Fibonacci retracement level, might continue to cap any meaningful up-move and is closely followed by the 1.1645-50 supply zone.