EUR/USD: Focus on ECB, dovish talk likely priced in

The EUR/USD pair is currently trading at 1.1388, having hit a three-week low of 1.1336 earlier this week. The currency pair could rise above 1.14 ahead of the European Central Bank (ECB) rate decision, the flag breakout on the 15-minute chart indicates. 

The central bank is expected to keep policy unchanged today and acknowledge the recent slowdown in the biggest economies of Eurozone - Germany, France, and Italy. 

The central bank could also downgrade the bank's economic assessment, arguing that growth risks are now tilted to the downside.

That would imply a dovish turn, something which markets seem to have anticipated and priced well in advance. 

Moreover, the rate markets pushed back expectations of the deposit rate hike to mid-2020 in the first week of this month. Further, EUR/USD has dropped more than 200 pips in the last three weeks. 

As a result, the downside in the EUR could be limited, unless Draghi uses strong words while describing downside risks to the economy, bolstering hopes of policy easing. 

Also, the common currency will likely fly high if Draghi refrains from downgrading the risk assessment. The central bank head may do that as downgrading the risk assets may raise hopes of monetary stimulus, complicating the process of policy normalization. 

EUR/USD Technical Levels