The EUR/USD pair shed its latest gains and trades near the base of this week range, still presenting a neutral stance as investors wait for Draghi. Markets have already priced in some fresh stimulus for today, but there's loads of uncertainty on what the Central Bank may offer today, beyond further cuts in the deposit rate, by 10-15bp. Many market participants believe that the measure will not be enough at this point, and that Draghi needs to add "something else" like a LTRLO extension, or some way to ease credit conditions for banks.
But the big question now is if he is actually ready to deliver a shocking surprise, or stick to the latest decision, and just cut the deposit rate, something that will be taken as extremely disappointing. The bank is also largely expected to trim its inflation forecasts for this year and the next one.
View the Live chart of the EUR/USD
In the meantime, the technical picture shows that the pair has been moving some 50 pips both side of the 1.1000 figure, with a marked downward potential, considering that the pair remains below 1.1000, despite broad dollar's weakens. In the 4 hours chart, the price is back below its moving averages, with the 20 and 100 SMAs converging around 1.1000, and the technical indicators heading south below their mid-lines, in line with further declines.
Should the price accelerate below the 1.0930 region, the decline can extend down to 1.0880 first, and 1.0840 then. As commented on previous updates, strong buying interest is aligned around the 1.0800 level, so approaches to it may see sellers taking profits out of the table. Above 1.1000 on the other hand, the rally can quickly extend up to the 1.1050 region, whilst further gains can extend up to the 1.1100/20 region should the EUR benefit from Draghi's decision.
Latest updates on the EUR/USD Forecast
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