EUR/USD may face event-driven volatility this week

EUR/USD conslidates after last week's bullish close above 1.20.
EU's budget and relief package will be decided on Thursday.
Poland and Hungary have vowed to veto the budget.
The ECB is expected to boost its asset purchase program.

Omkar Godbole FXStreet Contributor

EUR/USD may face increased volatility, with the European Union (EU) scheduled to decide budget and relief package on Thursday alongside European Central Bank's monetary policy decision.

Both Poland and Hungary have vowed to veto the budget, including the €750 billion ($909 billion) coronavirus stimulus package. Both nations believe the budget is punishing them for their conservative values, as noted by Financial Times.

The Eurozone is already facing deflation since September, and the odds of a double-dip recession have increased with the resurgence of coronavirus. As such, a fiscal stimulus package is the need of the day and will likely bolster the bullish pressure around the euro.

EUR/USD rose to a 2.5-year high of 1.2178 last week and is currently trading largely unchanged on the day near 1.2133.

The ECB, too, is expected to increase the size of its asset purchases this Thursday. While that's typically bearish for the currency, the central bank's impending dovish seems to have been priced in by markets. Moreover, the central bank needs to match the Federal Reserve's aggressive easing to put downward pressure on the euro.

Data wise, the focus will be on the German industrial production due on Monday, German ZEW economic sentiment and revised Eurozone GDP figure on Tuesday, German trade balance on Wednesday, and Italian industrial production on Friday. The ongoing Brexit saga could also influence EUR/GBP and EUR/USD.

Technical levels

EUR/USD

Overview
Today last price	1.2134
Today Daily Change	0.0007
Today Daily Change %	0.06
Today daily open	1.2127

Trends
Daily SMA20	1.1913
Daily SMA50	1.182
Daily SMA100	1.1803
Daily SMA200	1.1434

Levels
Previous Daily High	1.2178
Previous Daily Low	1.2112
Previous Weekly High	1.2178
Previous Weekly Low	1.1924
Previous Monthly High	1.2003
Previous Monthly Low	1.1603
Daily Fibonacci 38.2%	1.2137
Daily Fibonacci 61.8%	1.2153
Daily Pivot Point S1	1.2101
Daily Pivot Point S2	1.2074
Daily Pivot Point S3	1.2036
Daily Pivot Point R1	1.2166
Daily Pivot Point R2	1.2204
Daily Pivot Point R3	1.2231

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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