- EUR/USD holds support of the trendline rising from Sept. 25 lows.
- The ECB is expected to maintain status quo on Thursday.
- The euro may extend recent decline if the bank sets the stage for more stimulus in December.
Having declined for the third straight day on Wednesday, EUR/USD is now taking a bear breather at key technical support. However, the relief could be short-lived, as the European Central Bank is expected to talk dovish during the policy review later Thursday.
Hovers near ascending trendline
The pair is currently trading near 1.1750. That level is currently housing the support of the trendline rising from Sept. 25 and Oct. 15 lows.
A breakdown would imply an end of the corrective bounce from the Sept. 25 low of 1.1612 and will likely invite stronger chart-driven selling.
ECB under pressure to ramp up stimulus
"With COVID-19 cases rising and several countries contemplating new restrictive measures, the European Central Bank is again under pressure to ramp up monetary stimulus support," FXStreet's analyst Joseph Trevisani mentioned in the ECB preview note.
Both France and Germany have reimposed lockdown restrictions. The latest measures are less severe than the ones initiated in April. Nevertheless, according to Deutsche Bank analysts, they are enough to bring about a fourth-quarter gross domestic product contraction when the Eurozone is facing deflationary pressures.
As such, the ECB is under more pressure than ever to boost stimulus. "The question is not if but when," Trevisani said.
The single currency's sell-off will likely gather pace if the ECB lays the ground for a December move. On the flip side, EUR/USD will likely pick up a bid if the central bank stays non-committal.
Apart from the ECB rate decision, the preliminary US gross domestic product figure for the third quarter, the weekly US jobless claims, and the broader market sentiment could influence the pair.
Stock markets have come under pressure this week on coronavirus concerns, strengthening the haven demand for the US dollar.
-637395408738365276.png)
Technical levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
RBA keeps interest rate steady at 4.35%, as expected
The Reserve Bank of Australia board members decided to keep the Official Cash Rate unchanged at 4.35% after its May monetary policy meeting on Tuesday. The policy announcement was widely expected by the markets. The RBA extended its pause for the fourth meeting in a row.
USD/JPY extends recovery above 154.00, focus on Fedspeak
The USD/JPY pair trades on a stronger note around 154.10 on Tuesday during the Asian trading hours. The recovery of the pair is supported by the modest rebound of US Dollar to 105.10 after bouncing off three-week lows.
Gold price extends its upside as markets react to downbeat jobs data
Gold price extends its recovery on Tuesday. The uptick of the yellow metal is bolstered by the weaker US dollar after recent US Nonfarm Payrolls (NFP) data boosted bets that the Federal Reserve would cut interest rates later this year.
Bitcoin miner Marathon Digital stock gains ground after listing by S&P Global
Following Bitcoin miner Marathon Digital's inclusion as an upcoming member of the S&P SmallCap 600, the company's stock received an 18% boost, accompanied by an $800 million rise in market cap.
RBA expected to leave key interest rate on hold as inflation lingers
Interest rate in Australia will likely stay unchanged at 4.35%. Reserve Bank of Australia Governor Michele Bullock to keep her options open. Australian Dollar bullish case to be supported by a hawkish RBA.